Home Equity Rates: Navigating a Shifting Landscape
Homeowners are finding a cautiously optimistic environment for tapping into their home equity. While rates saw a slight uptick recently – the $30,000 HELOC rose one basis point to 7.32%, and the five-year $30,000 home equity loan gained two basis points to 7.92% – they remain near three-year lows. This presents a potential opportunity for those looking to consolidate debt or finance home improvements.
Why Home Equity Lines Are Attracting Attention
The appeal of home equity products, like HELOCs (Home Equity Lines of Credit) and home equity loans, is growing, particularly for individuals carrying high-interest credit card debt. Joshua Smith, head of the metro mortgage division at Peoples National Bank, notes that homeowners are seeking alternatives to credit card interest rates that can exceed 30%.
| Current | 4 weeks ago | One year ago | 52-week average | 52-week low | |
| HELOC | 7.32% | 7.44% | 8.29% | 7.98% | 7.31% |
| 5-year home equity loan | 7.92% | 7.98% | 8.41% | 8.19% | 7.90% |
| 10-year home equity loan | 8.09% | 8.16% | 8.55% | 8.35% | 8.08% |
| 15-year home equity loan | 8.09% | 8.11% | 8.50% | 8.28% | 8.07% |
Note: Rates are based on a $30,000 line or loan amount.
The Fed’s Influence and Future Forecasts
The direction of home equity rates is closely tied to Federal Reserve policy and expectations surrounding long-term inflation. The Fed held interest rates steady at its January meeting, continuing to monitor economic indicators. Bankrate’s senior industry analyst, Ted Rossman, forecasts three quarter-point cuts in 2026, suggesting potential further rate decreases.
Home Equity vs. Other Borrowing Options
Compared to credit cards and personal loans, home equity products generally offer lower interest rates. Currently, HELOCs average 7.32%, while home equity loans average 7.92%, significantly lower than the average credit card rate of 19.60% and personal loan rate of 12.16%.
| Credit type | Average rate |
| HELOC | 7.32% |
| Home equity loan | 7.92% |
| Credit card | 19.60% |
| Personal loan | 12.16% |
Source: Bankrate national survey of lenders, February 11.
Though, lenders typically limit total home loans (including the mortgage) to 80-85% of a home’s value. Securing a favorable rate doesn’t negate the fact that these are still relatively high-cost debt products.
Home Equity Trends
- Homeowners’ equity stakes have risen 142% nationwide since 2020.
- HELOC balances increased by $12 billion in the fourth quarter of 2025, marking the 15th consecutive quarterly increase.
- The average homeowner currently has approximately $300,000 in home equity.
- Housing wealth for senior homeowners aged 62 and older reached a record high of $14.66 trillion in the third quarter of 2025.
Frequently Asked Questions
What is a HELOC?
A HELOC is a line of credit secured by your home equity, allowing you to borrow funds as needed, up to a certain limit.
What is a home equity loan?
A home equity loan provides a lump sum of money, secured by your home equity, which is repaid with fixed monthly installments.
How much equity do I need to qualify?
Lenders generally require homeowners to have at least 15-20% equity in their home to qualify for a HELOC or home equity loan.
What can I use a home equity loan for?
Home equity loans can be used for various purposes, including home improvements, debt consolidation, and major expenses.
Considering tapping into your home equity? Explore your options and compare rates from different lenders to find the best fit for your financial needs.
