HELOC interest rates see slight increase

From Yahoo Finance: 2025-06-15 06:00:00

HELOC interest rates slightly rose today amid speculation about the Federal Reserve’s short-term rate decision. Homeowners are considering second mortgages like HELOCs to access growing home equity. Zillow reports rates at 6.73% for 10-year HELOCs and 6.36% for VA-backed HELOCs. $34 trillion in home equity exists, making HELOCs an attractive option.

HELOC rates are determined by an index rate plus a margin, often the prime rate. Lenders have flexibility in pricing, so rates vary based on credit score and other factors. Introductory rates may be lower initially, but adjustable rates could rise substantially later. Keeping a low-rate primary mortgage and using a HELOC can maximize home equity access.

The best HELOC lenders offer low fees, fixed-rate options, and generous credit lines. With a HELOC, homeowners can access funds as needed, pay them back, and repeat the process, all while paying down their primary mortgage. LendingTree currently offers a HELOC rate of 6.50% for a $150,000 credit line.

HELOC rates can range from nearly 7% to 18%, depending on creditworthiness and lender. Timing may be ideal for homeowners with low mortgage rates to consider a HELOC for home improvements or other expenses. Using a HELOC responsibly can provide access to cash without sacrificing a favorable mortgage rate.

Drawing $50,000 from a $400,000 home’s equity line may result in a $395 monthly payment at an 8.75% variable interest rate. HELOCs typically have a 10-year draw period and 20-year repayment period, essentially extending to a 30-year loan. Borrowers should aim to repay the balance quickly to maximize the benefits of a HELOC.

Read more: A minimal move up for interest rates on home equity lines of credit