Rates for home equity lines of credit (HELOC) and home equity loans are holding near 7.5%, offering homeowners with ample equity access to some of the best rates in three years. The average monthly HELOC rate is 7.44%, and the national average rate for a home equity loan is 7.59%. Both rates require a minimum credit score of 780 and a CLTV of less than 70%.

HELOCs allow for flexible draw access, while home equity loans provide a lump sum. With mortgage rates stagnant, homeowners may feel frustration in accessing their growing home value. For those hesitant to give up low primary mortgage rates, a second mortgage in the form of a HELOC or HEL can be a viable solution.

The Federal Reserve estimates $36 trillion in untapped home equity. HELOC interest rates are calculated differently from primary mortgage rates, often based on an index rate plus a margin. Lenders have flexibility in pricing, so shopping around for the best rate is crucial based on credit score, debt amount, and credit drawn compared to home value.

HELOC rates may feature introductory rates lasting up to a year before adjusting, while home equity loans have fixed rates without introductory rates. The best HELOC lenders offer low fees, fixed-rate options, and credit lines based on individual needs. Comparing rates and repayment terms is essential before choosing a lender.

HELOC introductory rates can vary significantly, with rates ranging from 6% to 18%. For homeowners with low primary mortgage rates and substantial equity, considering a HELOC or home equity loan for expenses such as home improvements may be beneficial. Discipline in repayment is crucial to avoid long-term debt accumulation.

During a 10-year draw period, withdrawing $50,000 from a HELOC at 7.50% interest would result in a monthly payment of approximately $313. It’s important to note that rates are variable, leading to increased payments during the 20-year repayment period. HELOCs and HELs are ideal for short-term borrowing and repayment strategies.

Read more at Yahoo Finance: HELOC and home equity loan rates today, January 6, 2026: Holding near 7.5%