With falling rates, homeowners are warming to HELOCs and home equity loans. “While borrowers have been relatively timid in tapping the equity, declining borrowing rates could make tapping home equity relatively more affordable in the future,” said Cotality chief economist Dr. Selma Hepp, in an analysis.
The average HELOC rate is 7.20%, down three basis points from one month ago, according to real estate analytics firm Curinos. The 52-week HELOC low was 7.19% in mid-January. The national average rate on a home equity loan is 7.47%, up three basis points from last month. The low was 7.38% in early December 2025.
Rates are based on applicants with a minimum credit score of 780 and a maximum combined loan-to-value ratio (CLTV) of less than 70%.
With mortgage rates remaining near 6%, homeowners with home equity and a low primary mortgage rate may feel the frustration of not being able to access that growing value in their home. A second mortgage in the form of a HELOC or HEL can be a workable solution.
Home equity interest rates are calculated differently than primary mortgage rates. Second mortgage rates are based on an index rate plus a margin. That index is usually the prime rate, which is currently 6.75%. If a lender added 0.75% as a margin, the HELOC would have a rate of 7.50%.
A home equity loan may have a different margin because it is a fixed-interest product.
Each lender has its own pricing methodology for second mortgage products, such as a HELOC or home equity loan, so it pays to shop. Your rate will depend on your credit score, the amount of debt you carry, and the amount of your credit line compared to the value of your home.
And average national HELOC rates can include “introductory” rates that may only last for six months or one year. After that, your interest rate will become adjustable, likely beginning at a higher rate.
Again, because a home equity loan has a fixed rate, it’s unlikely to have an introductory “teaser” rate.
The best HELOC lenders offer low fees, a fixed-rate option, and generous credit lines. A HELOC allows you to easily use your home equity in any way and in any amount you choose, up to your credit line limit. Pull some out; pay it back. Repeat.
Look for a lender offering a below-market introductory rate. For example, FourLeaf Credit Union is currently offering a HELOC APR of 5.99% for 12 months on lines up to $500,000. That introductory rate will convert to a variable rate in one year. When shopping for lenders, be aware of both rates.
Also, pay attention to the minimum draw amount of a HELOC. The draw is the amount of money a lender requires you to initially take from your equity.
The best home equity loan lenders may be easier to find, because the fixed rate you earn will last the length of the repayment period. That means just one rate to focus on. And you’re getting a lump sum, so no draw minimums to consider.
And as always, compare fees and the fine print of repayment terms.
Rates vary from one lender to the next — and by where you live. You may see rates from nearly 6% to as much as 18%. It really depends on your creditworthiness and how diligent a shopper you are. The national average for an adjustable-rate HELOC is 7.20%, and for a fixed-rate home equity loan is currently 7.47%. Try to match or beat those rates.
For homeowners with low primary mortgage rates and a significant amount of equity in their house, it’s likely one of the best times to obtain a HELOC or home equity loan. You don’t give up that great mortgage rate, and you can use the cash drawn from your equity for things like home improvements, repairs, and upgrades. Or just about anything else.
If you withdraw the full $50,000 from a line of credit on your home and pay a 7.25% interest rate, your monthly payment during the 10-year HELOC draw period would be about $302. That sounds good, but remember that the rate is usually variable, so it changes periodically, and your payments will increase during the 20-year repayment period. A HELOC essentially becomes a 30-year loan. HELOCs are best if you borrow and repay the balance within a much shorter period.
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