A quiet week: HELOC and home equity loan rates stay still — and low

Not much movement with home equity rates in the latest week. The average rate on a $30,000 home equity line of credit (HELOC) was unchanged, holding at 8.12 percent, according to Bankrate’s national survey of lenders. The average rate on the benchmark 5-year $30,000 home equity loan also remained unchanged at 8.23 percent — the lowest level we’ve seen this year — though rates on longer-term loans did decrease slightly.

While depressed rates often stimulate borrowers — home equity loan originations have been especially robust this year — homeowners need to consider their overall financials when tapping their home’s value, says Sarah Rose, senior home equity manager at Affinity Federal Credit Union. “The approval on a home equity loan or a HELOC is ultimately made on whether you can afford to repay the loan,” she says. “A lot of people are under the assumption that as long as they have equity, they will get approved. This is not the case.”

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 HELOC and home equity loan rates have declined substantially from highs in 2024, although HELOC rates have rebounded somewhat from lows they hit earlier this year. Still, Bankrate Chief Financial Analyst Greg McBride is holding to his forecast that home equity rates will decline in 2025, with HELOCs averaging 7.25 percent and home equity loans coming in at 7.90 percent.

“Both are still well within the realm of possibility if the Fed resumes cutting interest rates in the second half of the year,” McBride says.

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 80 to 85 percent 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. “Many homeowners are sitting on a mountain of home equity, but borrowing against it is still costly, with the average rate still over 8 percent and many lenders charging double-digit interest rates,” McBride says. “This is not the low-cost form of borrowing that homeowners had become accustomed to for many years. So if you must borrow, have a game plan for paying it back.”

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• 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.