Home Equity Rates Hold Steady At Two-Year Lows

Image: Getty Images; Illustration: Bankrate

Home equity rates were unchanged in the latest week, holding at their lowest point in two years. The $30,000 home equity line of credit stayed at 7.81%, according to Bankrate’s national survey of lenders. Meanwhile, the benchmark five-year $30,000 home equity loan also didn’t budge, remaining at 7.99%.

Denese Carty, East Coast Divisional Director at Churchill Mortgage, says it’s impossible to predict with certainty where rates are headed, but current indicators suggest rates may decrease slightly in the near term. “However, the rate environment shouldn’t be the primary factor in deciding whether to pursue a HELOC or home equity loan,” she says. “The real value proposition is simpler: These products typically offer significantly lower interest rates compared to other credit options, like personal loans or credit cards.”   

Note: The home equity rates in this survey assume a line or loan amount of $30,000.

What’s driving home equity rates today?

Both HELOC and home equity loan rates have declined substantially from their 2024 highs. Rates are being driven primarily by two factors — the first one is the Federal Reserve’s actions. In particular, the Fed impacts the cost of variable-rate products, like HELOCs. After cutting rates by a quarter point at its September and October meetings, the central bank may still lower borrowing costs one more time this year.

What could complicate matters for the Fed is the longest government shutdown in U.S. history, which is now over. The stoppage delayed crucial economic data, like the monthly jobs report, creating greater economic uncertainty.

Add to that lender competition, promotional offers and underwriting standards, all of which also have an impact on HELOC and home equity loan rates, says Stephen Kates, senior analyst at Bankrate. But beyond rates, “Some banks offer additional perks or services that may benefit borrowers,” he says. “Shopping around and comparing multiple offers is the best way to secure a competitive rate and find a banking relationship that aligns with your financial goals.”

Current home equity rates vs. rates on other types of credit

Because HELOCs and home equity loans use your home as collateral, their rates tend to be much less expensive — more akin to current mortgage rates — than the interest charged on credit cards or personal loans, which aren’t secured.

While average rates are useful to know, the individual offer you receive on a particular HELOC or new home equity loan reflects additional factors, like your creditworthiness and financials. Then there’s the value of your home and the size of your ownership stake. Lenders generally limit all your home loans (including your mortgage) to a maximum of 80% to 85% of your home’s worth.

Keep in mind: Even if you’re able to secure a favorable rate from a lender, home equity products are still relatively high-cost debt.

Unlock your home’s value

A fixed-rate home equity loan offers a lump-sum payout and a predictable repayment schedule.

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