The national average rates for home equity lines of credit (HELOC) and home equity loans have fallen with the prime rate, which is now 6.75%. With lender markups, both are close to or just below 7.5%.
According to Curinos data, the average HELOC rate is 7.44%. The national average rate on a home equity loan is 7.59%.
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 an impressive amount of value tied up in their homes — nearly $36 trillion at the end of the second quarter of 2025, according to the Federal Reserve. This is the largest amount of home equity ever recorded.
With mortgage rates remaining in the low 6% range, homeowners are unlikely to abandon their primary mortgage anytime soon, so selling a home may not be an option. A cash-out refinance might not be feasible either. Why give up your 5%, 4% or even 3% mortgage?
Accessing some of that value with a HELOC to use as needed or a home equity lump sum loan can be a great alternative.
MORE: Here are our picks for the best home equity lenders.
Home equity interest rates are calculated differently than mortgage rates. Second mortgage rates are based on an indexed rate plus a margin. This index is often the prime rate, which is 6.75% after the Federal Reserve’s last rate cut on December 10. If a lender added 0.75% 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 rate product.
Lenders have flexibility in pricing 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 amount of your line of credit relative to the value of your home. Shop with two or three lenders to find your best interest rate deal.
With three rate cuts from the Federal Reserve in 2025, the prime rate has fallen to 6.75%. As a result, home equity lenders have re-evaluated their products.
Today, FourLeaf Credit Union offers a 5.99% HELOC APR for 12 months on lines up to $500,000. This is an introductory rate which will later be converted into a variable rate.
As evidenced by the supply side, lenders will not only lower their adjustable rates, but also their introductory rates, following the Fed’s rate cut policy.
When researching lenders, be aware of both rates. And as always, compare fees, repayment terms and minimum withdrawal amount. The drawdown is the amount of money a lender asks you to initially draw down from your equity.
The best home equity lenders may be easier to find because the fixed rate you’ll earn will last for the duration of the repayment period. This means that you only need to focus on one rate. And you receive a lump sum, so no drawdown minimum to consider.
Rates vary greatly from lender to lender. You can see rates ranging from 6% to 18%. It really depends on your creditworthiness and diligence as a buyer. Currently, the national average for a HELOC is 7.44% and for a home equity loan it is 7.59%.
Interest rates have been falling for most of 2025. They will likely continue to fall this year. So yes, now is a good time to get a second mortgage. And with a HELOC or HEL, you can use money from your equity for things like improvements, repairs, and upgrades.
If you withdraw the entire $50,000 from a home line of credit and pay an interest rate of 7.50%, your monthly payment over the 10-year withdrawal period would be approximately $313. This 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 time frame.
