Richard Drury/Getty Images; Illustration: Austin Krege/Bankrate
Home equity lending rates have been basically steady this week. The $30,000 HELOC (home equity line of credit) fell 1 basis point to 8.68%, the lowest level this year. According to a national survey of lenders conducted by Bankrate, the average home equity loan of $30,000 remained unchanged at 8.35%.
“We expect these rates to slowly decline over the final quarter of 2025,” said Ralph Dibugnara, president of Home Qualified, a digital resource for home buyers, sellers, and real estate agents. says. “The Fed recognized that inflation had peaked and began the process of lowering borrowing rates.”
| the current | 4 weeks ago | 1 year ago | 52 week average | 52 week low | |
|---|---|---|---|---|---|
| HELOC | 8.68% | 8.94% | 9.09% | 9.32% | 8.68% |
| 15 year home equity loan | 8.38% | 8.38% | 9.13% | 8.78% | 8.37% |
| 10 year home equity loan | 8.46% | 8.47% | 9.09% | 8.81% | 8.46% |
| Note: Home equity rates in this study assume a line or loan amount of $30,000. | |||||
What is driving home interest rates up today?
HELoan and HELOC rates appear to be on a sustained downward trend after hovering around 9% for over a year. Their movement is currently driven by two factors. One is competition among lenders, with banks and mortgage companies trying to attract applicants with low loan terms for a limited period of time, and the other is action by the Federal Reserve.
“When the Fed cut interest rates a while ago, it had a ripple effect and home equity and HELOC rates went down a little bit,” said Seamus Nally, CEO of TurboTenant, a real estate management solutions provider. say. “Decisions at the next Fed meeting will determine whether interest rates continue to fall, remain flat, or rise again.”
Greg McBride, chief financial analyst at Bankrate, agrees: “For existing borrowers, HELOC interest rates will be affected by Federal Reserve rate cuts, typically with a one- to two-month lag.” “Average interest rates available to new borrowers are also affected by the introduction or termination of promotional rate offers.”
McBride also noted that HELOC borrowers in particular can expect interest rates to continue to fall, especially since the Federal Reserve recently cut interest rates by half a percentage point and could see further cuts before the end of the year. The next Fed meeting is scheduled for November 6-7.
“HELOC rates are sensitive to falling interest rates, and borrowers will see interest rates fall steadily, even faster than with fixed-rate mortgages,” he says. “HELOC interest rates may be lower than credit card interest rates, especially if competition leads to introductory offers or credit card issuers are cautious about late payments and are slow to offer lower interest rates. It may drop quickly.”
What Affects Mortgage Interest Rates?
Several factors can affect home equity loan and HELOC interest rates.
The most important of these is changes in the Federal Reserve’s monetary policy. New home equity loans and HELOCs are tied to the prime rate, which tends to stay at the same level as the base rate adjusted by the Federal Reserve. As a result, borrowing costs for equity-based loans tend to rise when the Fed raises interest rates. And when you lower interest rates, the opposite happens.
The Fed’s actions affect the overall direction of interest rates not only for mortgages, but also for consumer loans and finance in general. However, because HELOCs and HELoans use your home as collateral, interest rates tend to be closer to current mortgage rates and are much cheaper than the interest rates charged on unsecured credit cards or personal loans.
Compare consumer loan interest rates
Of course, the Fed’s monetary policy influences overall interest rate movements and the advertisements you see. However, the individual offer you receive from a lender for a particular HELOC or new HELoan will depend on additional factors, namely your creditworthiness, specifically your credit score, your debt-to-income ratio, and the value of the home you are pledging as collateral. It is reflected. .
