Image: Getty Images; Illustration: Bankrate

Mixed action for home equity rates in the latest week, with both products landing at their lowest level in three years. The benchmark five-year $30,000 home equity loan fell six basis points to 7.92%, according to Bankrate’s national survey of lenders. At the same time, the $30,000 home equity line of credit remained unchanged, holding at its three-year low of 7.44%. 

When rates hit those lows in 2023, demand for home equity borrowing picked up amid rising homeowner equity, growing household debt and strong renovation activity fueled by the lock-in effect of high mortgage rates, says Jeff DerGurahian, chief investment officer and head economist at loanDepot. “In addition to the economic data driving lower rates, investor appetite in the secondary market among those who buy, fund and securitize these products has continued to grow and is sending rates lower, making HELOCs and home equity loans even more attractive borrowing options for homeowners,” he says.

What’s driving home equity rates today?

Home equity rates are driven primarily by two factors — Federal Reserve policy and long-term inflation expectations. The Fed cut rates three times in 2025, sending HELOCs and home equity loans to their lowest levels in two years.

More relief could be on the way in 2026. Ted Rossman, Bankrate’s senior industry analyst, forecasts that home equity rates will continue edging lower if the Fed delivers the three quarter-point cuts currently projected for 2026.

According to Rossman, the Fed is now more focused on labor market conditions than on inflation pressures. He believes the economy will stay in good shape this year, and that could increase the appetite for home equity borrowing. “That could actually apply a little downward pressure on rates, too,” 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 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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