Home equity loan interest rate This is a bit lower than a year ago, thanks in large part to the Fed's lower tax rates in late 2024.

Example: 5 years Home equity loan Nearly 9% on average January 2024. Now, it is 8.36%. Interest rate for the household net worth credit line (Helocs) fell, from an average of just over 10% to the 7% range they are in today.

These lower prices are good news for homeowners who need cash – especially compared to the high prices consumers see on credit cards today. But there is no guarantee that they will last. The Fed still has six meetings left for 2025, and other economic factors may also increase or decrease.

If you are considering taking out a home equity loan this year, it helps to understand what you expect from interest rates. Below, we have collected insights and identification from some experts in this field.

First look at the lows of the home equity loan interest rates you are eligible for here.

What’s next for the home equity loan interest rate?

Here are the experts we talk to now predict the home equity loan interest rate:

The rates should remain stable in the short term

In most cases, expert projects will temporarily stabilize home equity products. The biggest reason? The Fed is not in a hurry to lower interest rates again soon.

As Fed Chairman Jerome Powell said in his recent post-conference press conference: "I don't think we're in a hurry to move. And, as I mentioned, I think it's easy for us to wait for further clarity, not in a hurry."

Therefore, if the overall interest rate remains stable, it may be Home equity loan Helocs will also remain the same, prohibiting any significant changes in the market.

"While no one knows where the next loan interest rate is, I hope that for the rest of 2025, the interest rate will stabilize to lower."

Explore your current home equity loan ratio here.

It may drop further later this year

As Maginn mentioned, there is a possibility that home equity rates will fall later this year. The Fed is expected to make two cuts at some point this year, while Cmegroup’s FedWatch tool uses investment activity to predict future Fed moves, suggesting that these cuts are unlikely at the next meeting (scheduled in May).

However, depending on market conditions, they can be at a later meeting - June, July, September, October or December.

"I expect Heloc and home equity loan rates to be lowered over the next six to 12 months," said Evan Luchaco, a home loan expert at Churchill Mortgage. "Once dust reaches tariffs and the market gets used to the new business order, I believe we will start to see the Fed move towards lowering the Fed's funding rate, leading the decline in Heloc and home equity loan rates."

Helocs might be a better deal

Also, if you need Click on your home fairHELOC may be a better option than Home equity loan. That's because HELOC rate yes Below the home equity loan interest rate Currently, you can save on your monthly payments and interest.

“On average, HELOC charges interest rates 40 to 50 basis points lower than home equity loans,” McKin said.

Just be careful, because Helocs have Variable interest rate meeting Adjust monthly. If you don’t have a plan to actively repay from the start, they can also bring in more interest costs over the long term.

"With HELOC, you usually just have to pay interest-only payments during the draw, so usually that's what people do and then they go for a few years without paying anything meaningful to the principal," said John Bergquist, president of financial services at Elysium, an investment management firm. "So, maintaining the full balance over time means they'll also pay more interest over time."

Bottom line

Currently, the experts we talk to believe that the home equity loan ratio remains relatively stable. But many Factors drive home equity loan interest ratesincluding Fed policy, so changes may begin in June. During the transition period, homeowners should also explore their HELOC options as interest rates are significantly lower than the rates for home equity loans and due to variable interest rates in response to market changes (while home equity loan rates will remain fixed unless re-fixed).

Learn more about your HELOC and home equity loan options here.