Home equity lines of credit (HELOC) and home equity loans have seen a decrease in national average rates, following the drop in the prime rate to 6.75%. With lender markups, both are now hovering around 7.5%. According to Curinos data, the average HELOC rate stands at 7.44%, while the national 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 combined loan-to-value ratio (CLTV) of less than 70%. Homeowners in the United States have an impressive amount of equity tied up in their houses, totaling nearly $36 trillion as of the end of the second quarter of 2025, according to the Federal Reserve.
With mortgage rates remaining low, homeowners are reluctant to let go of their primary mortgage, making selling their house or opting for a cash-out refinance less appealing. Instead, tapping into the equity through a HELOC or home equity loan can be a viable alternative.
Home equity interest rates are calculated differently from mortgage rates, with second mortgage rates typically based on an index rate plus a margin. The prime rate, currently at 6.75%, often serves as the index. Lenders have the flexibility to adjust pricing based on factors such as credit score, debt amount, and the credit line compared to the home’s value.
Following three rate cuts by the Federal Reserve in 2025, home equity lenders have been adjusting their products accordingly. For instance, FourLeaf Credit Union is offering a HELOC APR of 5.99% for 12 months on lines up to $500,000, reflecting the trend of lower rates in response to the Fed’s policy.
When comparing lenders, it’s crucial to consider both rates, along with fees, repayment terms, and minimum draw amounts. Fixed-rate home equity loans offer a stable rate for the repayment period, simplifying the decision-making process. Rates can vary significantly among lenders, ranging from 6% to 18%, depending on creditworthiness and diligence in shopping around.
Interest rates have been on a downward trend in 2025 and are expected to continue declining. This makes it a favorable time to consider a second mortgage, whether for home improvements, repairs, or upgrades. However, it’s important to understand the implications of using a HELOC, as payments can fluctuate during the repayment period.
Overall, accessing home equity through a HELOC or home equity loan can provide homeowners with financial flexibility and opportunities for leveraging their property’s value. By exploring different lenders and understanding the terms and rates offered, individuals can make informed decisions to meet their financial goals.
