HELOC Rates Hit Lowest Level Since 2022

Image: Getty Images; Illustration: Bankrate

A big drop in HELOC rates in the latest week. The $30,000 home equity line dropped 13 basis points to 7.04%, its lowest level since 2022, according to Bankrate’s national survey of lenders. In contrast, the five-year $30,000 home equity loan was unchanged, holding at 7.85%. 

Both HELOCs and home equity loans are the most affordable they’ve been in years, making them a more competitive borrowing option.

“Homeowners have a tremendous amount of equity in their property,” says Michael Pearson, senior vice president of business development at A&D Mortgage. “Much of that equity has been sitting in place for a number of years now. Families have plans, whether those are upgrades, major improvements or upsizing or downsizing properties. There are just a ton of people who are waiting for something to change to take action.”

What’s driving home equity rates today?

Home equity rates are driven primarily by two factors — Federal Reserve policy and long-term inflation expectations. At the Fed’s latest policy-setting meeting in March, the central bank once again left rates unchanged, as it continues to monitor inflation and the job market.

“The Fed standing pat should keep home equity borrowing rates more or less unchanged,” says Bankrate senior industry analyst Ted Rossman. “They’re currently hovering around three-year lows, so while borrowers would surely welcome lower rates, current levels aren’t too bad relative to the recent past. This situation could persist for the balance of the year.”

Inflation and geopolitical tensions are also expected to impact rates. At the start of the year, Rossman predicted the Fed would deliver three quarter-point cuts in 2026. However, because of stubborn inflation and the ongoing war in Iran, Rossman no longer believes the Fed’s rate cuts will be that aggressive. “In other words, rates probably won’t move much for the foreseeable future,” he 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 also 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 of 80% to 85% 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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