National average rates for second mortgage products are near one-year lows, encouraging well-qualified borrowers to shop for the best interest rates. The average HELOC rate is 7.23%, down slightly from last month, while home equity loan rates average 7.44%. Homeowners hold nearly $34 trillion in home value, making second mortgages appealing.

HELOC and home equity loan rates are based on a margin added to an index rate, typically the prime rate. Lenders consider factors like credit score and debt amount when determining rates. For example, a HELOC with a margin of 0.75% on top of the prime rate of 6.75% would result in a 7.50% variable rate.

The best home equity loan lenders offer fixed rates that last the entire repayment period, simplifying the process for borrowers. Rates for second mortgages can vary widely, ranging from 6% to 18%. Current national averages stand at 7.23% for HELOCs and 7.44% for home equity loans, with rates expected to remain steady.

Interest rates have fallen in 2025 and are projected to be stable in 2026, making it a favorable time for second mortgages. HELOCs and home equity loans offer flexibility for using cash drawn from home equity, whether for renovations, repairs, or other expenses. Borrowers should be diligent in comparing rates and terms from different lenders.

When considering a HELOC, borrowers should be aware of variable interest rates and potential payment increases over the repayment period. Drawing the full amount and paying a 7.50% interest rate could result in a $313 monthly payment during the draw period. HELOCs are best suited for short-term borrowing and repayment strategies.

Read more at Yahoo Finance: HELOC and home equity loan rates today, February 6, 2026: Fractions off one-year lows