HELOCs Hold Steady, Home Equity Loans Rise Slightly

Image by GettyImages; Illustration by Bankrate

Not much movement in home equity loan rates in the latest week. The average rate on a $30,000 home equity line of credit (HELOC) was unchanged at 8.27 percent, according to Bankrate’s national survey of lenders. The average rate on the $30,000 home equity loan rose one basis point to 8.26 percent.

While HELOC rates have increased since the spring, home equity loan rates remain near their 2025 lows. In fact, the five-year loan and the line of credit cost almost exactly the same. To choose between them, homeowners considering borrowing against their home equity should ask themselves a series of questions, says Christopher Carter, vice president sales manager at Univest Home Loans, a home equity lender based in Philadelphia:

• What are my intentions for the loan or line?
• How much am I looking to borrow?
• How quickly do I intend to pay it off and how? Will I pay extra towards the principal?
• How long do I plan on occupying the property?
• How much equity will I maintain post-closing and what happens if property values deteriorate?
• What is my plan should there be some catastrophic development with employment, income or health?

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.

Both 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.

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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.