Interest rates on home equity lines of credit (HELOCs) and home equity loans have dropped significantly over the past year. Average HELOC rates have decreased by 81 basis points while home equity loan rates are down 40 basis points. This could be a good time to secure a rate on a second mortgage.

The average national HELOC rate is 7.25%, down 19 basis points from last month. For home equity loans, the national average rate is 7.56%, three basis points lower than the previous month. Rates are based on applicants with a minimum credit score of 780 and a CLTV ratio of less than 70%.

While primary home mortgage rates remain stable, homeowners with equity may feel frustrated about accessing it. A second mortgage, like a HELOC or home equity loan, could be a valuable solution to unlock the growing value in their homes.

The Federal Reserve estimates that U.S. homeowners have $36 trillion in equity, and a second mortgage allows them to tap into this record-setting equity. HELOCs and HELs offer a way to access this equity without giving up a low primary mortgage rate.

HELOC rates are based on an index rate plus a margin, often using the prime rate which has recently fallen to 6.75%. Lenders have flexibility in pricing, so shopping around is key. Rates are influenced by credit score, debt amount, and credit line compared to home value.

Average national HELOC rates may include introductory rates that could adjust to higher rates after a certain period. HELs typically offer a fixed rate for the entire agreement, providing stability for borrowers.

For homeowners with equity and a low primary mortgage rate, now may be one of the best times to consider a HELOC or home equity loan. Accessing equity can fund home improvements, repairs, or upgrades without sacrificing a favorable mortgage rate.

LendingTree is offering a HELOC with an APR as low as 6.36% for a credit line of $150,000. However, be aware that HELOCs usually have variable rates, so monthly payments could increase if rates rise. Compare fees and repayment terms before choosing a lender.

The best home equity loan lenders offer fixed rates for the entire repayment period, making it easier to manage monthly payments. With a lump sum payout, borrowers can focus on a single rate without draw minimums.

HELOC rates currently range from just below 6% to as high as 18%, depending on creditworthiness and lender. Homeowners with equity and a low primary mortgage rate may find great value in exploring HELOCs or home equity loans at this time.

When considering a HELOC, borrowers should be aware of potential payment fluctuations due to variable rates. HELOCs are best suited for short-term borrowing and repayment, as they can essentially become a 30-year loan if not managed properly.

Read more at Yahoo Finance: Significant decreases since last year