HELOC interest rates are at their lowest level in more than three years

Image: Getty Images; Diagram: Bank Rate

HELOC rates fell slightly this week as the Fed held interest rates unchanged at its second meeting in 2026. The $30,000 home equity line fell 1 basis point to 7.17%, the lowest in more than three years, according to Bankrate’s national lender survey. Meanwhile, five-year, $30,000 home equity loans rose one basis point to 7.85%.

Stephen Kates, a financial analyst at Bankrate, says while timing is important when monitoring interest rates and trying to decide between a HELOC and a home equity loan, there’s no guarantee that interest rates will drop in the short term.

“Homeowners planning projects or large expenses that can be financed with a HELOC should carefully consider their borrowing options,” he says. “Using a HELOC now requires the understanding that interest rates may not drop right away, so borrowers should not rely on future interest rate declines to make payments more affordable. If payments fit comfortably within your budget, a HELOC can be a useful tool that allows you to remain flexible and keep other cash reserves intact.”

What is driving home interest rates up today?

Home equity rates are determined primarily by two factors: Federal Reserve policy and long-term inflation expectations. At its most recent policy meeting in March, the Fed kept interest rates on hold again as it continues to monitor inflation and the job market.

“If the Fed maintains the status quo, mortgage rates should remain about the same,” said Ted Rothman, senior industry analyst at Bankrate. “Borrowers will no doubt welcome lower interest rates, as they are currently hovering near three-year lows, but current levels are not much worse than they have been recently, and this situation could continue for the rest of the year.”

Inflation and geopolitical tensions are also expected to affect interest rates. Rothman predicted earlier this year that the Fed would cut interest rates by three quarter-points in 2026. But with stubborn inflation and the Iran war, Rothman no longer believes the Fed will cut rates as aggressively. “In other words, interest rates probably won’t move much for some time,” he said.

Comparison of current home equity interest rates and interest rates on other types of credit

Because HELOCs and home equity loans use your home as collateral, their interest rates tend to be much cheaper than the interest rates charged on unsecured credit cards or personal loans, and are closer to current mortgage rates.

While knowing the average interest rate is helpful, the individual offer you receive on a particular HELOC or new home equity loan will also reflect additional factors, such as your creditworthiness and financial situation. Then there is the value of the home and the size of the ownership. Lenders typically limit all home loans (including mortgages) to a maximum of 80% to 85% of the home’s value.

Remember: Even if you can secure a favorable interest rate from a lender, home equity products are still relatively high-cost debt.