HELOC Rates Edge Lower as Prime Falls to 6.75%

The average interest rate on a home equity line of credit (HELOC) has slipped below 7.5% nationwide, according to analytics firm Curinos, as lenders reset pricing to the new prime rate of 6.75%. Curinos’ latest weekly data put the typical HELOC rate at 7.44% for applicants with a credit score of at least 780 and a combined loan-to-value (CLTV) ratio no higher than 70%.

Prime rate cut moves second-mortgage pricing

HELOCs are usually structured as variable-rate second mortgages tied to an index, most commonly the U.S. prime rate. When that benchmark dropped to 6.75%, lenders began revising their offerings. A standard pricing model adds a margin to the index; with a 0.75-percentage-point spread, a borrower would see a rate of 7.50%. The size of that margin can change from one lender to another and is heavily influenced by a borrower’s credit profile, existing debt load and requested line amount.

Record home equity underpins borrowing demand

American homeowners held nearly $36 trillion in real estate equity at the end of the second quarter of 2025, the largest figure on record, the Federal Reserve reports. At the same time, 30-year fixed mortgage rates remain above 6%. Many borrowers who secured 3% to 5% first-lien mortgages earlier in the decade are reluctant to refinance or sell, keeping HELOCs in focus as a source of funds without disturbing low primary rates.

Rate dispersion remains wide

Current offers range from just under 6% to roughly 18%, reflecting differences in credit scores, loan sizes and lender pricing strategies. Some advertised figures include introductory rates lasting six to 12 months; once those periods end, balances convert to fully variable interest that resets periodically. Because terms vary widely, market observers recommend comparing not only annual percentage rates but also fee schedules, repayment periods and minimum draw requirements.

Example offers highlight variability

As of today, LendingTree lists an annual percentage rate as low as 6.38% on a $150,000 credit line, illustrating how competitive pricing can be for well-qualified borrowers. Nevertheless, most HELOCs adjust over time, so borrowers need to evaluate whether projected payments remain affordable if rates rise during the draw or repayment periods.

How repayments work

Typical HELOC structures feature a 10-year draw phase followed by a 20-year repayment period. Drawing the full $50,000 from a hypothetical credit line at 7.50% would produce an interest-only payment of roughly $313 per month during the draw window. After the draw phase ends, the balance is amortized over the remaining term, increasing required payments even if the interest rate remains unchanged. Because rates are variable, any upward movement in the index would push monthly obligations higher.

Shopping strategies

Borrowers are advised to gather quotes from multiple lenders, focusing on:

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• Index and margin structure
• Lifetime rate caps and adjustment frequency
• Origination, annual and inactivity fees
• Availability of fixed-rate conversion options
• Minimum initial draw amounts

Some institutions allow borrowers to lock portions of a variable HELOC balance into a fixed rate, adding predictability during repayment. Others offer introductory discounts offset by higher margins later. Differences in these features can materially affect long-term borrowing costs.

Use cases and cautions

Homeowners often direct HELOC funds toward remodeling projects, repairs or other investments that may raise property value. The flexibility of drawing only what is needed and paying interest solely on outstanding balances can be an advantage compared with lump-sum home equity loans. However, using a HELOC for discretionary expenses such as vacations can extend repayment timelines and increase overall interest charges if balances are not retired promptly.

Market outlook

The recent prime rate reduction has already filtered into quoted HELOC rates, and additional repricing is possible as lenders adjust margins. For homeowners with substantial equity and low first-mortgage coupons, current conditions present an opportunity to access cash without refinancing into a higher fixed rate. Still, the variable nature of most HELOCs means that careful budgeting and rate monitoring remain essential.

Crédito da imagem: Curinos