HELOC and home equity loan rates Saturday, January 3, 2026: Lower rates are in your favor

Core Insights - National average HELOC and home equity loan rates are currently around 7.5%, making it a favorable time for homeowners looking to upgrade their homes or reduce high-interest debt [1][11] - The Federal Reserve estimates that homeowners have approximately $36 trillion in equity locked in their homes, which may lead to frustration for those unable to access this value due to stagnant mortgage rates [3] HELOC and Home Equity Loan Rates - As of January 3, 2026, the average monthly HELOC rate is 7.44%, while the national average for home equity loans is 7.59% [2][11] - Rates are based on applicants with a minimum credit score of 780 and a maximum combined loan-to-value ratio of less than 70% [2] Interest Rate Structure - Home equity interest rates differ from primary mortgage rates, with second mortgage rates typically based on an index rate plus a margin, often the prime rate, which is currently at 6.75% [4] - A HELOC rate could be around 7.50% if a lender adds a margin of 0.75% [4] Lender Flexibility and Shopping - Lenders have flexibility in pricing second mortgage products, making it beneficial for borrowers to shop around [5] - Average national HELOC rates may include introductory rates that last for a limited time, after which the rate becomes adjustable [5] Introductory Rates and Offers - Some lenders, like FourLeaf Credit Union, are offering HELOCs with introductory rates as low as 5.99% for the first 12 months on lines up to $500,000 [8] - It is important for borrowers to be aware of both the initial and subsequent rates when shopping for lenders [8] Home Equity Loan Characteristics - Home equity loans typically have fixed rates that last for the entire repayment period, making them easier to manage compared to HELOCs [9] - Borrowers receive a lump sum with home equity loans, eliminating concerns about draw minimums [9] Current Market Conditions - For homeowners with low primary mortgage rates and significant equity, now is considered one of the best times to obtain a HELOC or home equity loan [12] - The national average for HELOCs is 7.44% and for home equity loans is 7.59%, with rates varying significantly based on creditworthiness [11]