HELOC and home equity loan rates Sunday, January 18, 2026: Significant decreases since last year

Core Insights - Interest rates on home equity lines of credit (HELOCs) and home equity loans have significantly decreased over the past year, with the average HELOC rate dropping by 81 basis points from over 8% to 7.25% and home equity loan rates down by 40 basis points to 7.56% [1][2] Group 1: Current Market Conditions - The Federal Reserve estimates that homeowners have $36 trillion in equity locked within their homes, indicating a substantial opportunity for homeowners to access this equity through second mortgages like HELOCs or home equity loans [4] - The average HELOC rate is currently 7.25%, down 19 basis points from the previous month, while the national average for home equity loans is 7.56%, a decrease of three basis points [2] Group 2: Loan Characteristics - HELOCs typically have variable interest rates that can fluctuate, while home equity loans usually offer fixed rates that remain constant throughout the loan term [5][7] - Lenders have flexibility in pricing second mortgage products, and rates can vary based on credit scores, debt levels, and loan-to-value ratios [6] Group 3: Borrowing Considerations - Homeowners with low primary mortgage rates and significant equity may find it advantageous to obtain a HELOC or home equity loan, allowing them to leverage their home equity without sacrificing their favorable mortgage rates [3][13] - The best HELOC lenders offer low fees, fixed-rate options, and generous credit lines, making it easier for homeowners to access their equity as needed [8] Group 4: Payment Structures - For a $50,000 HELOC at a 7.50% interest rate, the monthly payment during the 10-year draw period would be approximately $313, but this amount may increase during the repayment period due to the variable nature of the interest rate [14]