HELOCs Rise, Home Equity Loans Flat As The Fed Stays Steady

Image by GettyImages; Illustration by Bankrate

The Federal Reserve stood pat on interest rates for the fourth meeting in a row, and home equity loans were flat — but HELOCs bumped up a bit. The average rate on the $30,000 HELoan remained at 8.25 percent for the third straight week. Meanwhile, the average rate on a $30,000 home equity line of credit rose five basis points to 8.27 percent, according to Bankrate’s national survey of lenders.

While the central bank took a cautionary stance on inflation and the impact of President Trump’s tariffs this time, it also signaled that two interest rate cuts could be in the cards by the end of 2025. Forecasts by the CME FedWatch tool predict the Fed lowering lower rates by a half point by year’s end. “That would likely push home equity loan and line of credit rates down by a similar amount,” says Ted Rossman, senior industry analyst at Bankrate. “There’s a good chance rates will remain pretty flat through the summer and cuts could come into play more in the September to December timeframe.”

Tap your home’s value

Keep your financial options open and put your equity to use with a flexible HELOC.

Explore HELOC offers

What’s driving home equity rates today?

Rates on HELOCs and home equity loans are being driven primarily by two factors: lender competition for new customers and the Federal Reserve’s actions. The Fed especially impacts the cost of variable-rate products like HELOCs.

While they’ve ticked up lately, HELOCs and home equity loans have fallen substantially from the highs they hit at the beginning of 2024, with HELOC rates in particular reaching lows not seen since 2023. Bankrate Chief Financial Analyst Greg McBride forecasts that rates will continue to decline in 2025 — especially those on HELOCs, potentially to their lowest level in three years.

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.

Of course, the individualized 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 your ownership stake. Lenders generally limit all your home-based loans (including your mortgage) to a maximum 80 to 85 percent of your home’s worth.

Even if you are able to secure a good rate from a lender, home equity products are still relatively high-cost debt, notes Rossman.
“With average home equity loan and line of credit rates in the 8 percent range right now, that’s close to the border of what distinguishes between lower- and higher-cost debt,” he says. “It’s not nearly as low as the sub-4 percent rates we saw three years ago, but not as high as the 10+ percent rates that we observed a year and a half ago.”

• Methodology
  

  The Bankrate.com national survey of large lenders is conducted weekly. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the Bankrate.com national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans and mortgages. We’ve conducted this survey in the same manner for more than 30 years, and because it’s consistently done the way it is, it gives an accurate national apples-to-apples comparison.