HELOC, home equity rates rise

Home equity rates posted broad gains this week. The $30,000 home equity line rose 16 basis points to 7.26%, according to Bankrate’s national lender survey. Meanwhile, the $30,000 five-year home equity loan rose 12 basis points to 8.03%.

Even with this week’s increase, home equity rates remain the most affordable in years. Roger Boschulte, head of auto and home loan products at Bank of America, points to two factors supporting demand for home equity loans.

“If you look at usable equity, we’re still over $11 trillion, which is close to record levels. That’s one aspect that’s helping to drive origination volumes within the home equity space,” he says. “The other notable tailwind is the lock-in effect of low mortgage rates driven by pandemic-era policies. When customers look to access capital, they want to make sure they preserve those low mortgage rates.”

What’s Driving Home Equity Rates Today?

Home equity rates are being driven primarily by two factors: Federal Reserve policy and long-term inflation expectations.

As expected, the Federal Reserve held interest rates steady at its last policy-setting meeting in May. However, uncertainty about their next moves intensifies. In the largest show of dissent since 1992, four Federal Reserve officials opposed the decision to keep rates unchanged.

“If it weren’t for the inflation created by the war in Iran, there’s a good chance the Fed would cut rates,” says Ted Rossman, senior analyst at Bankrate. “They’re sitting still for now, waiting to see what happens with prices. The labor market, the other side of the Fed’s dual mandate, looks relatively stable for now.” As a result, Rossman predicts that “it should be a generally flat rate environment for the remainder of 2026, meaning an average of about 7% for HELOCs and about 8% for home equity loans.”

Learn more: How the Federal Reserve Affects HELOCs and Home Equity Loans

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 (closer to current mortgage rates) than the interest charged on credit cards or personal loans, which are unsecured.

While it’s helpful to know average rates, the individual offer you receive on a HELOC or new home equity loan also reflects additional factors, such as your creditworthiness and finances. Then there’s the value of your home and the size of your ownership interest. Lenders generally limit all of your home loans (including your mortgage) to a maximum of 80% to 85% of the value of your home.