Home Equity Rates Drop: HELOCs & Loans See Significant Rate Cuts
Homeowners looking to tap into their home equity are in luck. In the week of September 24, both HELOCs and home equity loans saw significant drops in rates. By the end of the year, average HELOC rates could reach around 7.3 percent, and fixed-rate home equity loans may ease to around 7.9 percent.
The Federal Reserve's recent rate cut has driven these changes. The central bank lowered its benchmark overnight lending rate for the first time in 2025, marking the start of a potential easing cycle after months of steady rates. HELOC rates, being variable and tied to the prime rate, have responded swiftly to the Fed's move. Home equity loan rates, while less sensitive, can still shift gradually.
Promotional HELOC rate offers may be subdued due to the timing of the Fed's rate cuts at the end of the year. The next changes in HELOC and home equity loan interest rates are expected around the upcoming Federal Reserve meetings, typically held every six weeks. These changes will depend on economic data and inflation trends. Despite this, home equity tapping is likely to rise due to equity growth and homeowners being 'locked in' to low mortgage rates.
Lower home equity rates may take time to reach borrowers' wallets. A series of interest rate cuts could make a significant difference. Homeowners should stay informed about the Fed's decisions and keep an eye on HELOC and home equity loan rates for potential savings.
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