HELOC and Home Equity Loan Rates Continue Downward Trend, Averaging 7.25% and 7.56%

Average borrowing costs for home equity lines of credit (HELOCs) and fixed-rate home equity loans have fallen sharply over the past 12 months, offering homeowners an alternative way to access cash without refinancing their primary mortgages. New industry data show the typical HELOC rate at 7.25%, while the average home equity loan now stands at 7.56%.

The figures, compiled by real estate analytics firm Curinos, reflect applications from borrowers with credit scores of 780 or higher and a combined loan-to-value ratio below 70%. On a year-over-year basis, the average HELOC rate is down 81 basis points from the 8% level recorded last January. The average rate for a home equity loan has declined 40 basis points over the same period.

How current rates compare

Month to month, both products continued to ease. The average HELOC rate fell 19 basis points in the past 30 days, while the average home equity loan rate dropped three basis points. Although the changes appear modest in absolute terms, they build on a broader trend that has opened a window for qualified homeowners to secure lower borrowing costs on a second mortgage.

Second-lien rates differ from first-mortgage rates because lenders typically price them using an index—most often the U.S. prime rate—plus a margin that can vary by institution. The prime rate recently slipped to 6.75%. If a lender adds a 0.75% margin, the resulting HELOC rate would be 7.50%. Competitive pricing can improve those numbers, and some providers advertise starting rates well below the national average. For example, one lender is currently marketing a 6.36% annual percentage rate on a $150,000 credit line.

Why demand is rising

Many borrowers locked in historically low first-mortgage rates before 2022, and those rates have remained stubbornly higher ever since. Replacing a 3% or 4% first mortgage with a new loan in today’s market often makes little financial sense. Tapping equity through a HELOC or a fixed-rate home equity loan allows homeowners to keep their original mortgage while still accessing available funds.

The opportunity is sizable. According to the Federal Reserve, U.S. homeowners collectively hold roughly $36 trillion in home equity. With property values broadly elevated, a growing share of that equity is available to borrowers who meet lender requirements for credit score, debt-to-income ratio and loan-to-value limits.

Variable versus fixed options

HELOCs function as revolving credit lines. Borrowers can draw funds as needed during an initial borrowing period, commonly 10 years, and repay only the amount used. Interest rates are usually variable, resetting at regular intervals in line with movements in the index rate. Some lenders advertise introductory rates that last six to 12 months before converting to fully variable pricing. Homeowners considering a HELOC should budget for potential payment increases once the promotional period ends and again when the loan converts to its 20-year repayment phase.

A home equity loan differs because the entire balance is disbursed upfront and carries a fixed interest rate for the life of the loan, typically five to 30 years. The predictability of fixed monthly payments appeals to borrowers funding one-time projects such as major renovations or debt consolidation.

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Rate variability and borrower qualifications

Industry surveys show HELOC and home equity loan offers ranging from just under 6% to as high as 18%. The spread reflects underwriting factors including credit profile, loan amount, property value and regional competition. Lenders also retain discretion to adjust margins, origination fees and closing costs, giving consumers an incentive to compare multiple quotes.

Average rates published by Curinos assume a high credit score and conservative loan-to-value ratio. Applicants with lower scores or higher leverage may receive less favorable terms, while exceptionally strong borrowers can, in some cases, negotiate below-average rates. Experts recommend reviewing the fine print, particularly any annual fees, minimum draw requirements or early termination charges.

Cost illustration

To gauge potential expenses, consider a borrower who draws the full $50,000 available on a HELOC at a 7.50% variable rate. During the 10-year draw period—when minimum payments typically cover only interest—the monthly payment would be about $313. After the draw phase, the line converts to a 20-year amortizing repayment schedule, and the payment amount would rise as the principal balance starts amortizing. Because the rate is variable, any future increase in the prime rate would push monthly costs higher.

Shopping tips

Borrowers can strengthen their applications by checking credit reports, paying down revolving debt and confirming their home’s current market value. Comparing at least three lenders—focusing on the margin over the index, fee structure and repayment flexibility—can yield meaningful savings over the life of the loan.

The recent decline in average HELOC and home equity loan rates may not last indefinitely, particularly if broader interest rate trends reverse. Homeowners interested in leveraging equity while preserving a low first-mortgage rate have a narrowing window to act under current market conditions.

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