What are today's HELOC and home equity loan interest rates?

Homeowners currently have access to relatively affordable borrowing options through home equity loans and home equity lines of credit (HELOCs), with average interest rates hovering around 7%. This comes at a time when personal loan rates are near 12% and credit card rates remain high, making other forms of borrowing costly.

With average home equity levels exceeding $300,000, tapping into this asset is presented as a smart and effective strategy for obtaining funds. The article notes that these rates are significantly lower than most alternatives and are expected to decrease further as the federal funds rate potentially declines later in 2025.

Home equity loans provide a lump sum of money with a fixed interest rate, and repayments begin immediately. HELOCs, conversely, offer a revolving line of credit with variable interest rates. Borrowers only make payments on the amount they draw, with initial periods often requiring interest-only payments before a repayment period begins, typically after 10 to 15 years.

In addition to lower interest rates compared to other loan products, both HELOCs and home equity loans may offer attractive tax benefits, although the article cuts off before detailing these specifics. Potential borrowers are advised to shop around for the best rates and terms, as offers can vary based on location, lender, and individual credit profiles.