HELOC and home equity loan rates Saturday, January 24, 2026: Why now is a smart time to tap home equity

Core Insights - Home equity lines of credit (HELOC) and home equity loan rates are currently averaging around 7.5%, with HELOC rates at 7.25% and home equity loans at 7.56% [1][2][11] - The Federal Reserve estimates that homeowners have approximately $34 trillion in equity locked in their homes, presenting an opportunity for homeowners to access this value through second mortgages like HELOCs or home equity loans [3] Interest Rates and Trends - The average HELOC rate has decreased by 19 basis points from the previous month, while home equity loan rates have dropped by three basis points [2] - Second mortgage rates are influenced by an index rate plus a margin, with the current prime rate at 6.75%, leading to an average HELOC rate of 7.50% when a margin of 0.75% is applied [4] Borrowing Opportunities - Homeowners with low primary mortgage rates and significant equity may find it advantageous to obtain a HELOC or home equity loan for purposes such as home improvements [12] - Lenders offer flexibility in pricing for second mortgage products, making it essential for borrowers to shop around for the best rates based on their creditworthiness and debt levels [5] Loan Structures and Features - HELOCs typically have variable rates that may start lower due to introductory offers, while home equity loans usually have fixed rates for the duration of the repayment period [6][9] - An example of a competitive HELOC offer includes a 5.99% APR for the first 12 months from FourLeaf Credit Union, after which the rate becomes variable [8] Payment Considerations - For a $50,000 HELOC at a 7.50% interest rate, the monthly payment during the draw period would be approximately $313, but this rate is variable and may increase during the repayment period [13]