HELOC Rates Plunge To Lowest Level In 3 Years

Image: Getty Images; Illustration: Bankrate

HELOC rates took a big dive in the latest week, dropping to three-year lows. The $30,000 home equity line of credit plummeted 78 basis points to 7.44%, as a major lender resumed its promotions, according to Bankrate’s national survey of lenders. Meanwhile, the benchmark five-year $30,000 home equity loan rose one basis point to 7.98%. 

Ted Rossman, senior industry analyst at Bankrate, puts the two-week HELOC roller coaster ride in context.

“In general, it’s a falling-rate environment for HELOCs and home equity loans, although we got a head fake last week when Bank of America ended a HELOC promotion, causing the HELOC average to jump more than half a percentage point,” he says. “A couple of years ago, the average HELOC rate was around 10%, while the average home equity loan charged about 9%. With rates perhaps headed closer to 7% by the end of the year, it’s getting more attractive to use home equity for purposes such as home improvements and debt consolidation.”

What’s driving home equity rates today?

Home equity rates are driven primarily by two factors — Federal Reserve policy and long-term inflation expectations. The Fed cut rates three times in 2025, sending HELOCs and home equity loans to their lowest levels in two years.

More relief could be on the way in 2026. Rossman forecasts that home equity rates will continue edging lower if the Fed delivers the three quarter-point cuts currently projected for 2026.

According to Rossman, the Fed is now more focused on labor market conditions than on inflation pressures. He believes the economy will stay in good shape this year, and that could increase the appetite for home equity borrowing. “That could actually apply a little downward pressure on rates, too,” he 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 of 80% to 85% 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.

Unlock your home’s value

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

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