Learn about current home equity loan interest rates and what to consider when borrowing against your home equity. We discuss average rates, factors influencing rates, and whether waiting for lower rates is a good strategy.
If you've been searching for a way to borrow money at a low cost, you haven't had many options to choose from over the past few years. As inflation spiked, the Federal Reserve issued a series of interest rate hikes to combat it. That led to interest rates on everything from mortgages to personal loans to credit cards to surge in tandem. And while inflation has since declined significantly, the federal funds rate has only come down by one full percentage point.
That's left interest rates on personal loans around 12% currently and credit cards at a new record high of approximately 23%.Fortunately, there's been one cost-effective way to borrow in this climate: home equity, specifically via a home equity loan. And with the average homeowner in possession of around $320,000 worth of equity now, there's likely plenty for borrowers to utilize. Before getting started, however, it's important to know what home equity loan interest rates are today and, specifically, what's considered a good one for prospective borrowers. Below, we'll break down what to know now, in 2025, about rates on this unique product.See how low of a home equity loan rate you could qualify for here.What's a good home equity loan interest rate in 2025?The average home equity loan interest rate (as of January 8, 2025) is 8.43% and slightly higher for different repayment periods (8.55% for a 10-year one and 8.49% for a 15-year repayment period). So if you can get a rate under any of those three, you can consider it a 'good' one right now. That noted, home equity loan rates steadily declined for much of 2024, starting last January at 9.08% for a 15-year loan, according to historical Bankrate data. So average rates are down by more than half a percentage point. And with additional rate cuts from the Fed likely for later in 2025, they're positioned to fall even further as the year evolves. Still, interest rate cuts are likely to be reduced this year compared to the pace the Federal Reserve set in the final months of 2024. And any number of economic factors could slow that pace further – or even allow for rates to remain where they are now. So, if you know you need the money and can comfortably afford to repay what you've borrowed at today's prevailing rates (a key consideration when borrowing with your home as collateral), it may not make sense to wait for rates to decline any further. Instead, consider locking in a low home equity loan rate now, while they're readily available. You can always refinance should rates drop materially lower from where they are this month and, in the interim, you'll gain access to the funding you require now.Get started with a home equity loan online today.What about HELOC interest rates?Right now, rates on home equity lines of credit (HELOCs) are actually slightly lower than home equity loans as they average around 8.27% for qualified borrowers. But rates on HELOCs are variable and, thus, are subject to change based on evolving market conditions. This can be an advantage when rates are steadily declining as they were toward the end of 2024, but it can also be a burden when the long-term rate outlook is less clear, as it appears to be this January. And with the difference in 'good' rates between HELOCs and home equity loans negligible right now, the higher fixed rate that a home equity loan comes with may be safer for many borrowers. However, it's important to weigh both options before applying.The bottom lineAn optimal home equity loan interest rate is anything that can be locked in under today's averages. So consider a rate under 8.55% for a 10-year loan or 8.49% for a 15-year one valuable and worth securing today. That said, the best home equity loan interest rates will always be reserved for homeowners with the cleanest credit profiles and highest credit scores, so if you don't have both it won't matter what's listed on lender websites. Instead, consider boosting your credit score in the interim and hope that by the time it's high enough, home equity loan rates have again fallen
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