Home equity loans and HELOC rates both reach 2023 lows

Core Insights - Home equity rates have reached their lowest levels in three years, with the five-year home equity loan at 7.92% and the home equity line of credit (HELOC) at 7.44% [1][3] Group 1: Current Rates and Trends - The benchmark five-year home equity loan decreased by six basis points to 7.92%, while the HELOC rate remained unchanged at 7.44% [1] - Over the past four weeks, the HELOC rate has decreased from 7.63% to 7.44%, and the five-year home equity loan rate has dropped from 7.99% to 7.92% [3] - The 52-week average for HELOCs is 8.04%, and for the five-year home equity loan, it is 8.22% [3] Group 2: Factors Influencing Rates - Home equity rates are primarily influenced by Federal Reserve policy and long-term inflation expectations [4] - The Federal Reserve's rate cuts in 2025 have contributed to the current low levels of HELOCs and home equity loans [4] - Forecasts suggest that home equity rates may continue to decline if the Fed implements projected rate cuts in 2026 [4] Group 3: Market Demand and Economic Conditions - Increased demand for home equity borrowing is noted due to rising homeowner equity, growing household debt, and strong renovation activity [2] - The current economic conditions are expected to maintain a favorable environment for home equity borrowing, potentially applying downward pressure on rates [5] - HELOCs and home equity loans are comparatively less expensive than unsecured credit options like credit cards and personal loans [6]