HELOC Rates Remain Under 9%, But Be Aware of Introductory Rates and Potential Rate Adjustments

The current HELOC interest rate is 8.72%, according to Bank of America, with a variable rate that kicks in after a six-month introductory APR of 6.49%. Homeowners can access some of their home's value with a HELOC, which is different from primary mortgage rates and determined by an index rate plus a margin. Lenders have flexibility with pricing on second mortgage products like HELOCs, so it pays to shop around based on credit score, debt, and home value.

As of August 20, 2025, home equity loan interest rates have shown some downward trends, with the 5-year, 10-year, and 15-year home equity loans averaging 8.23%, 8.38%, and 8.26% respectively [1]. These rates are calculated using a loan amount of $30,000, a FICO score of 700, and a combined loan-to-value ratio of 80 percent.

Unlike home equity lines of credit (HELOCs), which have variable rates, home equity loan interest rates are fixed. This means that once you close your loan, your rate will remain the same regardless of market fluctuations. However, interest rates on new home equity loans can shift in response to broader economic conditions and monetary policy, such as the actions of the Federal Reserve [1].

The Federal Reserve's latest meeting, held on July 29 and 30, saw the central bank maintain interest rates, defying pressure from President Trump to lower rates. The Fed is closely monitoring tariffs' impact on inflation and the economy, with the next meeting scheduled for September 16-17 [1].

For homeowners planning to finance major expenses, such as home renovations, choosing the right home equity product depends on both the interest rate environment and the cost of their current loans. A home equity loan might be a suitable option when interest rates aren't expected to fall, but your existing mortgage rate is lower than the current rates on home equity loans or lines of credit [1].

To find the best home equity loan rates, consider factors such as your credit score, debt-to-income ratio, loan amount, and term. Shop around with at least three lenders to compare offers, as rates, fees, and borrowing limits can vary widely. Ensure you understand all aspects of the loan, from closing costs to prepayment penalties, before signing the agreement [1].

References:
[1] https://www.bankrate.com/home-equity/home-equity-loan-rates/