HELOC rates drop to lowest level since March, as Fed cuts rates for the first time in 2025

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A split decision for home equity rates, as the Federal Reserve delivered an expected quarter-point interest rate cut, the first rate reduction this year. The average rate on a $30,000 home equity line of credit fell five basis points to 8.05 percent, according to Bankrate’s national survey of lenders. Meanwhile, the average rate on the benchmark 5-year $30,000 home equity loan climbed five basis points to 8.28 percent.

As Erik Schmitt, consumer direct executive at Chase Home Lending, explains, the Fed rate reduction is good news for HELOC borrowers, as HELOCs are tied to the prime rate. “For homeowners with HELOCs at a variable interest rate, a cut would most likely result in lower interest costs, leading to a potential lower monthly payment,” he says. “New HELOC applicants could also benefit as they would be generally borrowing against their equity at a lower interest rate.”

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. After cutting rates by a quarter point at its September meeting, the central bank suggested it may lower borrowing costs two more times this year.

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.

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.

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.