The national average rate for home equity lines of credit (HELOC) has hit a new low in over a year, falling three basis points from the previous month. The average HELOC rate is now at 7.25%, a decrease of 19 basis points from last month. Home equity loan rates also dropped to 7.56%.

Homeowners have nearly $36 trillion in home equity, the highest on record, according to the Federal Reserve. With mortgage rates remaining low, homeowners may not want to sell their homes. Utilizing a HELOC or home equity loan can provide access to this value without giving up low mortgage rates.

Lenders are adjusting rates following three rate cuts from the Federal Reserve. For example, FourLeaf Credit Union offers a HELOC APR of 5.99% for 12 months on lines up to $500,000. Introductory rates and adjustable rates are being lowered in response to the Fed’s lower-rate policy.

When shopping for home equity lenders, compare rates, fees, repayment terms, and minimum draw amounts. Fixed-rate home equity loans may offer more stability since the rate remains constant throughout the repayment period. Rates can vary from 6% to 18% based on creditworthiness and lender offers.

Interest rates for HELOCs and home equity loans have been decreasing throughout 2025 and are expected to continue falling. This makes it a good time to consider a second mortgage for purposes like home improvements. HELOCs are beneficial for shorter-term borrowing, while home equity loans provide a lump sum with a fixed rate.

When considering a HELOC, keep in mind that the interest rate is usually variable, and payments can increase over time. Monthly payments during the draw period can be affordable, but it’s important to plan for potential rate changes during the repayment period. HELOCs are best suited for short-term borrowing and repayment.

Read more at Yahoo Finance: A new low mark for HELOCs