Home equity rates hit a three-year low, with both the benchmark five-year $30,000 home equity loan dropping to 7.92% and the $30,000 home equity line of credit holding at 7.44%. Demand for home equity borrowing surged in 2023 due to rising homeowner equity and strong renovation activity.

Federal Reserve policy and long-term inflation expectations drive home equity rates, which dropped to their lowest levels in two years after the Fed cut rates three times in 2025. Bankrate’s senior industry analyst forecasts further rate decreases if the Fed delivers three quarter-point cuts in 2026, focusing more on labor market conditions than inflation pressures.

HELOCs and home equity loans, using your home as collateral, offer lower rates compared to credit cards or personal loans. The average rate for a HELOC is 7.44%, while a home equity loan averages 7.92%. In contrast, credit card rates average 19.62% and personal loan rates average 12.26%.

When considering a HELOC or home equity loan, factors like creditworthiness, financials, home value, and ownership stake come into play. Lenders typically limit all home loans to 80-85% of the home’s value, including the mortgage. Individual offers depend on various personal and financial factors.

Read more at Yahoo Finance: Home equity loans and HELOC rates both reach 2023 lows