Home equity and HELOC interest rates remain at three-year lows

Image: Getty Images; Diagram: Bank Rate

There was no change in housing rates as the Fed held interest rates unchanged at its first meeting in 2026.

A national survey of financial institutions conducted by Bankrate found that $30,000 home equity lines of credit and five-year $30,000 home equity loans were flat this week at 7.44% and 7.92%, respectively. With mortgage rates at a three-year low, Bankrate senior industry analyst Ted Rothman explains why conditions are improving for mortgage borrowers.

“The current HELOC average of 7.44% is the lowest in over three years,” he says. “It’s down nearly 3 percentage points from two years ago and is likely to fall below 7% this year for the first time since September 2022. Many homeowners are also sitting on record amounts of home equity.”

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. The Fed kept interest rates on hold at its January meeting as it continued to monitor inflation and the job market. Looking ahead to the rest of this year, Rothman expects the Fed to cut interest rates by a quarter of a percentage point three times in 2026.

“Inflation continues to ease, albeit slowly, and the job market appears to be stabilizing after rising unemployment,” he said. “Right now, the risks appear to be fairly balanced, and it will likely take some time for the Fed to decide on its next action. A new Fed chair will also be installed soon.”

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.

Average interest rates are good to know, but the individual offer you receive on your particular HELOC or new home equity loan will 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.