HELOCs plunge to lowest level in three years; home equity rates tick slightly higher

Core Insights - HELOC rates have significantly decreased, reaching three-year lows, with the average rate dropping to 7.44% due to a major lender resuming promotions [1] - The overall trend indicates a falling-rate environment for HELOCs and home equity loans, with expectations of rates potentially approaching 7% by the end of the year [2] Rate Comparisons - Current HELOC rate is 7.44%, down from 7.63% four weeks ago and 8.28% a year ago, with a 52-week average of 8.05% and a low of 7.44% [2] - The five-year home equity loan rate is currently at 7.98%, slightly up from 7.99% four weeks ago and down from 8.40% a year ago [2] Influencing Factors - Home equity rates are primarily influenced by Federal Reserve policy and long-term inflation expectations, with recent Fed rate cuts contributing to lower HELOC and home equity loan rates [3] - The Fed's current focus on labor market conditions rather than inflation may lead to increased home equity borrowing and potentially lower rates [4] Comparative Rates - HELOCs and home equity loans are significantly cheaper than unsecured credit options, with average rates of 19.64% for credit cards and 12.19% for personal loans [5] - Lenders typically limit total home loans to a maximum of 80% to 85% of a home's value, affecting individual offers for HELOCs and home equity loans [5]