Modest Shifts Leave Home Equity Rates Largely Steady

Image: Getty Images; Illustration: Bankrate

A mixed performance for home equity rates this week, holding near their lowest levels in about three years. The $30,000 home equity line of credit rose one basis point to 7.32%, according to Bankrate’s national survey of lenders. Meanwhile, the five-year $30,000 home equity loan fell two basis points to 7.87%. 

With home equity borrowing costs still relatively affordable, the decision to borrow against your home’s value depends on a homeowner’s individual situation, says Tom Hutchens, president of Angel Oak Mortgage Solutions.

“There’s certainly enough room for people to renovate kitchens and basements and do some projects that they’d put on hold,” he says. “Since 2020, we have seen a tremendous amount of equity growth and home price appreciation, which has created all that equity. Borrowers are really seeing that as an opportunity to tap into it without two things: without selling their house, and without getting rid of the ultra-low first mortgage rate that they likely have today.”

What’s driving home equity rates today?

Home equity rates are driven primarily by two factors — Federal Reserve policy and long-term inflation expectations. The Fed left interest rates unchanged at its January meeting, as it continues to monitor inflation and the job market. Looking ahead to the rest of the year, Bankrate’s senior industry analyst Ted Rossman forecasts the Fed will deliver three quarter-point cuts in 2026.

“Inflation continues to moderate, albeit slowly, and the job market appears to be stabilizing after a run-up in the unemployment rate,” he says. “Risks appear fairly balanced at the moment, and the Fed will likely take some time to determine its next move. We’re soon to get a new Fed Chairman, as well.”

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 also 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.

Explore offers