Rates for home equity lines of credit and home equity loans are hitting rock bottom as 2025 comes to a close. The affordability of monthly payments on HELOCs and HELs is increasing as homeowners tap into the record levels of home value available to them.
According to data analytics company Curinos, the national average monthly HELOC rate currently stands at 7.44%, while the average rate for a home equity loan is 7.59%. These rates are based on applicants with a minimum credit score of 780 and a maximum CLTV ratio of 70%.
The Federal Reserve reports that homeowners have an unprecedented $36 trillion in home equity as of the second quarter of 2025, marking the highest amount ever recorded. With mortgage rates hovering around 6%, homeowners are reluctant to part ways with their primary mortgage, which may have significantly lower rates. In light of this, accessing the locked-in value of their homes through a second mortgage like a HELOC or home equity loan is becoming an attractive option.
Home equity interest rates differ from primary mortgage rates as they are based on an index rate plus a margin. The prime rate, which serves as the index, has recently dropped to 6.75%. For instance, if a lender adds a margin of 0.75%, a HELOC could have a rate of 7.50%. On the other hand, a home equity loan typically has a fixed interest rate.
Lenders have the flexibility to set pricing on second mortgage products, so it’s advisable to shop around for the best rates. Factors such as credit score, debt load, and credit line compared to home value will influence the rate offered. Additionally, national average HELOC rates may include introductory rates that could expire after a certain period, leading to an adjustable rate.
While a HELOC may offer flexibility in using home equity, a home equity loan provides a lump sum with a fixed rate for the entire repayment period. It’s essential to compare fees and repayment terms when selecting a lender for either option.
FourLeaf Credit Union is currently offering a competitive HELOC rate of 5.99% for 12 months on lines up to $500,000, which will convert to a variable rate of 7.25% later on. When considering lenders, it’s crucial to be aware of both the introductory and subsequent rates.
Overall, tapping into home equity through a HELOC or home equity loan can be a wise financial move. It allows homeowners to retain their low-rate primary mortgage while accessing cash for home improvements, repairs, or other expenses. However, it’s important to consider the variable nature of HELOC rates and plan for potential payment increases over time.
