Slight gains for home equity rates, holding near 2025 lows

Home equity rates nudged modestly higher in the latest week, sticking close to their lows of the year. The $30,000 home equity line of credit rose one basis point to 7.89 percent, according to Bankrate’s national survey of lenders. The benchmark 5-year $30,000 home equity loan rose two basis points, to 8.21 percent.

Even with this week’s modest gains, Jeff DerGurahian, head economist at loanDepot, notes that rising home values have pushed equity to record highs, giving homeowners more borrowing power and flexibility. “Equity products typically carry rates far below other forms of unsecured debt, such as credit cards and personal loans,” he says. “That combination makes home equity products a smart financial option for consolidating high-interest debt or covering large expenses like home improvements, college tuition or medical bills.“

What’s driving home equity rates today?

Both HELOC and home equity loan rates have declined substantially from their 2024 highs and are near their lows of the year. 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 at its September meeting, the central bank suggested it may lower borrowing costs two more times this year.

“Homeowners considering a HELOC should be prepared for their rate to change shortly after each Fed decision,” says Stephen Kates, senior analyst at Bankrate. “Those considering a fixed-rate loan, on the other hand, should monitor rate trends closely to time their application for the best available offer, which may lag slightly behind Fed actions.”

Add to that lender competition, promotional offers and underwriting standards, all of which also have an impact on HELOC and home equity loan rates, says Kates. 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 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.

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A fixed-rate home equity loan offers a lump-sum payout and a predictable repayment schedule.

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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.