The national average rate for home equity lines of credit (HELOC) fell to a new low in more than a year. The average home equity loan rate is down three basis points from last month.
According to Curinos data, the average HELOC rate is 7.25%19 basis points less than last month. The national average home equity loan rate is 7.56%three basis points less than a month ago.
Both rates are based on applicants with a minimum credit score of 780 and a maximum combined loan-to-value (CLTV) ratio of less than 70%.
Homeowners have a staggering amount of equity tied up in their homes: nearly $36 trillion at the end of the second quarter of 2025, according to the Federal Reserve. That is the largest amount of home equity recorded.
With mortgage rates remaining in the low 6% range, homeowners are unlikely to walk away from their primary mortgage anytime soon, so selling a home may not be an option. A cash-out refinance may not be feasible either. Why give up your 5%, 4% or even 3% mortgage?
Accessing some of that equity with an as-needed HELOC or home equity loan can be a great alternative.
FURTHER: Here are our picks for the best home equity loan lenders.
Home equity interest rates are calculated differently than mortgage rates. Second mortgage rates are based on an index rate plus a margin. That rate is usually the prime rate, which is 6.75% following the Federal Reserve’s last rate cut on December 10. If a lender added 0.75% as 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 the pricing of 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 have, and the size of your line of credit compared to the value of your home. Shop between two or three lenders to find the best interest rate deal.
With three rate cuts by 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 5.99% HELOC APR for 12 months on lines up to $500,000. This is an introductory rate that will convert to a variable rate at a later date.
As the offering demonstrates, lenders will not only lower their adjustable rates, but also their introductory rates, following the Federal Reserve’s lower rate policy.
When shopping for lenders, keep both rates in mind. And as always, compare the fees, payment terms and minimum withdrawal amount. The withdrawal is the amount of money a lender requires you to initially withdraw from your equity.
The best home equity loan lenders may be easier to find because the fixed rate you earn will last the entire repayment period. That means just one rate to focus on. And you will receive a lump sum, so there are no withdrawal minimums to consider.
Rates vary significantly from lender to lender. You may see rates from 6% to 18%. It really depends on your creditworthiness and your diligence as a buyer. Currently, the national average for a HELOC is 7.25% and for a home equity loan it is 7.56%.
Interest rates fell through most of 2025. They are likely to fall further this year. So yes, it’s a good time to get a second mortgage. And with a HELOC or HEL, you can use the cash withdrawn from your equity for things like home improvements, repairs, and upgrades.
If you draw down the entire $50,000 on a line of credit on your home and pay an interest rate of 7.50%, your monthly payment over the 10-year draw period would be approximately $313. That sounds good, but remember that the rate is usually variable, so it changes periodically and your payments will increase over the 20-year repayment period. A HELOC essentially becomes a 30-year loan. HELOCs are better if you borrow and pay off the balance in a much shorter period of time.