Lenders reprice to a lower prime rate

The national average rates for home equity lines of credit (HELOC) and home equity loans have fallen along with the prime rate, which is now 6.75%. With lender markups, both are near or just below 7.5%.

According to Curinos data, the average HELOC rate is 7.44%. The national average rate on a home equity loan is 7.59%.

Both 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%.

Homeowners have an impressive amount of value tied up in their houses — nearly $36 trillion at the end of the second quarter of 2025, according to the Federal Reserve. That’s the largest amount of home equity on record.

With mortgage rates remaining in the low-6% range, homeowners are unlikely to let go of their primary mortgage anytime soon, so selling a house may not be an option. A cash-out refinance might not be workable either. Why give up your 5%, 4% — or even 3% mortgage?

Accessing some of that value with a use-it-as-you-need-it HELOC or lump-sum home equity loan can be an excellent alternative.

MORE: Here are our picks for the best home equity loan lenders.

Home equity interest rates are calculated differently from mortgage rates. Second mortgage rates are based on an index rate plus a margin. That index is often the prime rate, which is 6.75% following the last Federal Reserve rate cut on December 10. If a lender added 0.75% as a margin, the HELOC would have a variable rate of 7.50%.

A home equity loan may have a different margin, because it is a fixed-interest product.

Lenders have flexibility with pricing on a second mortgage product, such as a HELOC or home equity loan. 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. Shop two or three lenders to find your best interest rate offer.

With three rate cuts from the Federal Reserve in 2025, the prime rate has fallen to 6.75%. As a result, home equity lenders have been repricing their products.

Today, FourLeaf Credit Union is offering a HELOC APR of 5.99% for 12 months on lines up to $500,000. That’s an introductory rate that will convert to a variable rate at a later date.

As the offer proves, lenders will not only lower their adjustable rates, but their introductory rates too, following the Fed’s lower-rate policy.

When shopping for lenders, be aware of both rates. And as always, compare fees, repayment terms, and the minimum draw amount. 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.

Rates vary significantly from one lender to the next. You may see rates from 6% to as much as 18%. It really depends on your creditworthiness and how diligent you are as a shopper. Currently, the national average for a HELOC is 7.44%, and for a home equity loan it’s 7.59%.

Interest rates fell for most of 2025. They will likely keep dipping lower this year. So yes, it’s a good time to get a second mortgage. And with a HELOC or a HEL, you can use the cash drawn from your equity for things like home improvements, repairs, and upgrades.

If you withdraw the full $50,000 from a line of credit on your home and pay a 7.50% interest rate, your monthly payment during the 10-year draw period would be about $313. 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 of time.