Little Change in Home Equity Rates Ahead of Fed Meeting

Image: Getty Images; Illustration: Bankrate

Home equity rates barely budged heading into the final Federal Reserve meeting of 2025. The $30,000 home equity line of credit was unchanged, holding at 7.81% for the fourth straight week, according to Bankrate’s national survey of lenders. Meanwhile, the benchmark five-year $30,000 home equity loan fell two basis points to 7.99%, its lowest level in two years.

With home values at record highs and many homeowners locked into ultra-low mortgage rates, HELOCs and home equity loans can be a cost-effective way to access funds for renovations, debt consolidation or other expenses.

“If you have significant equity and a clear purpose for the funds, a HELOC or home equity loan can be a smart way to leverage your home’s value without sacrificing your existing mortgage rate,” says George Lazaridis, CEO and chief lending officer at Quontic Bank. “Always review your financial goals and consult with a trusted advisor before making a decision.” 

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 in both September and October, the central bank may still lower borrowing costs one more time this year at its December meeting.

Also influencing rates are lender competition, promotional offers and underwriting standards, 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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