Holiday Brings Little Change To Home Equity Rates

Image: Getty Images; Illustration: Bankrate

Minimal movements for home equity rates this Thanksgiving week. The $30,000 home equity line of credit was unchanged, holding at 7.81% for the third week in a row, according to Bankrate’s national survey of lenders. Meanwhile, the benchmark five-year $30,000 home equity loan inched up two basis points to 8.01%, keeping near its lowest point in two years.

Rates have stayed within a tight range throughout November. Denese Carty, East Coast Divisional Director at Churchill Mortgage, advises home equity borrowers not to let small fluctuations drive their decisions. “For homeowners who need access to credit, a HELOC or home equity loan often represents the most cost-effective borrowing option available, regardless of whether rates tick up or down by a quarter point,” she says. “The decision should be based on whether you have a legitimate need for credit and whether tapping your home equity makes sense for your overall financial situation.” 

Note: The home equity rates in this survey assume a line or loan amount of $30,000.

What’s driving home equity rates today?

Both HELOC and home equity loan rates have declined substantially from their 2024 highs. Rates are being driven primarily by two factors — the first one is the Federal Reserve’s actions. In particular, the Fed impacts the cost of variable-rate products, like HELOCs. After cutting rates by a quarter point at its September and October meetings, the central bank may still lower borrowing costs one more time this year.

What could complicate matters for the Fed is the longest government shutdown in U.S. history, which is now over. As the government resumes releasing delayed economic data, the emerging picture could shift expectations for future policy decisions.

Add to that lender competition, promotional offers and underwriting standards, all of which also have an impact on HELOC and home equity loan rates, says Stephen Kates, senior analyst at Bankrate. But beyond rates, “Some banks offer additional perks or services that may benefit borrowers,” he says. “Shopping around and comparing multiple offers is the best way to secure a competitive rate and find a banking relationship that aligns with your financial goals.”

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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