Home Equity Loan Rates Fall To Lowest Rates of 2025

Image by GettyImages; Illustration by Bankrate

Both HELOCs and home equity loans took a step down in the latest week. The average rate on a $30,000 home equity line of credit (HELOC) dropped two basis points to 8.10 percent, according to Bankrate’s national survey of lenders. The average rate on the benchmark 5-year $30,000 home equity loan fell one basis point to 8.22 percent — a low for the year.

If the lower rates have you thinking of tapping your home for cash, now could be an opportune time to do so, according to Satyan Merchant, TransUnion senior vice president and auto and mortgage business leader. “When a consumer has the equity available and meets the bar of what a lender is looking for, [home equity loans or HELOCs] continue to be a good product. Typically, the interest rate is lower than that of an unsecured loan.”

What’s driving home equity rates today?

Rates on HELOCs and home equity loans are being driven primarily by two factors: lender competition for new customers and the Federal Reserve’s actions. The Fed especially impacts the cost of variable-rate products like HELOCs.

Both HELOC and home equity loan rates have declined substantially from their 2024 highs, although HELOC rates have rebounded somewhat from this spring, when they were under 8 percent. Still, Bankrate Chief Financial Analyst Greg McBride is holding to his forecast that home equity rates will decline in 2025, with HELOCs averaging 7.25 percent and home equity loans coming in at 7.90 percent.

“Both are still well within the realm of possibility if the Fed resumes cutting interest rates in the second half of the year,” McBride 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 80 to 85 percent 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. “Many homeowners are sitting on a mountain of home equity, but borrowing against it is still costly, with the average rate still over 8 percent and many lenders charging double-digit interest rates,” McBride says. “This is not the low-cost form of borrowing that homeowners had become accustomed to for many years. So if you must borrow, have a game plan for paying it back.”

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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• Methodology
  

  The Bankrate.com national survey of large lenders is conducted weekly. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the Bankrate.com national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans and mortgages. We’ve conducted this survey in the same manner for more than 30 years, and because it’s consistently done the way it is, it gives an accurate national apples-to-apples comparison.