Current national average rates for home equity lines of credit and home equity loans continue to decline, making your second mortgage options even more affordable. Whatever your financial plans for 2026, a HELOC or HEL can give your budget some breathing room.
According to Curinos data, the average HELOC rate is 7.25%down 19 basis points from last month. The national average rate on a home equity loan is 7.56%three basis points lower 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%.
Choosing between a HELOC and a HEL is not that complicated. A HELOC allows you to draw on your approved line of credit as needed. A home equity loan gives you a lump sum.
As mortgage rates refuse to budge, homeowners with home equity and a favorable primary mortgage rate may feel the frustration of not being able to access this growing value in their home.
For those who don’t want to give up their low home loan rate, a second mortgage in the form of a HELOC or HEL may be a viable solution.
The Federal Reserve estimates that homeowners have $36 trillion in equity sitting in their homes. A second mortgage allows American homeowners to tap into the record-breaking equity they’ve accumulated.
HELOC interest rates are different from primary mortgage rates. Second mortgage rates are based on an indexed rate plus a margin. This index is often the prime rate, which has just fallen to 6.75%. If a lender added 0.75% margin, the HELOC would have a rate of 7.50%.
A home equity loan may have a different margin because it is a fixed interest product.
Lenders have the flexibility to price a second mortgage product, like a HELOC or home equity loan, so it pays to shop around. Your rate will depend on your credit score, the amount of debt you have, and the size of your line of credit relative to the value of your home.
And average national HELOC rates may include “introductory” rates that may only last six months or a year. After that, your interest rate will become adjustable, likely starting at a higher rate.
Again, since a home equity loan has a fixed rate, it is unlikely to have a “teaser” introductory rate.
The best HELOC lenders offer low fees, a fixed-rate option, and generous credit lines. A HELOC allows you to easily use your home equity in any way and amount you want, up to your line of credit limit. Take a little out; pay it back. Repeat.
Today, FourLeaf Credit Union offers a HELOC rate of 5.99% for 12 months on lines up to $500,000. This is an introductory rate which will later be converted into a variable rate. When researching lenders, be aware of both rates.
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.
And as always, compare fees and refund terms details.
Rates vary from lender to lender. You can see rates ranging from almost 6% to 18%. The national average for a HELOC is 7.25% and for a home equity loan is currently 7.56%. These can serve as a reference when researching rates from second mortgage lenders.
Is it a good idea to get a HELOC or home equity loan now?
For homeowners with low primary mortgage rates and a lot of equity in their home, now is probably one of the best times to get a HELOC or home equity loan. You don’t give up that great mortgage rate, and you can use the money from your equity for things like improvements, repairs, and upgrades.
If you withdraw the entire $50,000 from a home equity 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.
