The national average interest rate on a home equity line of credit remains below 7.5%, according to analytics firm Curinos. However, banks have started to increase their offer prices after the Federal Reserve cut interest rates by a quarter of a percentage point this week. One example is super low introductory rates. See details below.
According to Curinos data, the average weekly HELOC rate 7.44%. This rate is based on applicants with a minimum credit score of 780 and a maximum combined loan-to-value (CLTV) of 70%.
Homeowners’ homes are worth an impressive amount of money — nearly $36 trillion by the end of the second quarter of 2025, according to the Federal Reserve. This is the largest amount of home equity ever recorded.
With mortgage rates remaining as low as 6%, homeowners are unlikely to give up their primary mortgages anytime soon, so selling their homes may not be an option. Why give up a 5%, 4%, or even 3% mortgage?
Capturing some of that value through a use-as-you-go HELOC may be a good alternative.
HELOC interest rates are calculated differently than mortgage rates. The second mortgage interest rate is based on the index rate plus a security deposit. This index is typically the prime rate, currently at 7.00%, but will fall. If the lender adds 0.75% as security deposit, the interest rate on the HELOC will be 7.75%.
Lenders have flexibility in pricing second mortgage products such as HELOCs or home equity loans. Your interest rate will depend on your credit score, the amount of debt you carry, and how your credit limit compares to the value of your home. Shop between two or three lenders to get the best terms.
State HELOC rates can include “introductory” offers that may only last six months or a year. After that, your interest rate becomes adjustable and may increase significantly initially.
You don’t have to give up a low-rate mortgage to gain equity in your home. Keep your primary mortgage and consider a second mortgage, such as a home equity line of credit.
The best HELOC lenders offer low fees, fixed-rate options, and generous credit lines. A HELOC allows you to easily access your home equity in any way and in any amount you choose, up to your credit line limit. Pull some out; pay back the money. repeat.
Meanwhile, you’re paying off your primary mortgage at a low interest rate like a wealth-creating machine.
Fifth Third Bank was one of the banks that launched lower interest rate offers immediately after the Fed cut interest rates. The bank, which serves 12 states, has a promotional HELOC introductory rate starting at 4.99% for the first six months. After the six-month trial period, the interest rate will revert to the standard variable rate.
As this proposal demonstrates, following the Fed’s lower interest rate policy, lenders would not only lower their adjustable rates but also their introductory rates.
Keep an eye out for both rates when shopping with a lender. As always, compare fees, repayment terms and minimum withdrawal amounts. The drawdown amount is the amount the lender requires you to initially withdraw from your equity.
The power of a HELOC is to leverage only the funds you need and keep a portion of your credit limit for future needs. You don’t pay interest on things you don’t borrow.
Interest rates vary widely between lenders. You may see interest rates from 6% to as high as 18%. It really depends on your creditworthiness and how diligent you are as a shopper.
For homeowners with lower junior mortgage rates and higher home equity, this may be one of the best times to purchase a HELOC. You won’t give up that high a mortgage rate, and you can use the cash drawn from your equity for things like home improvements, repairs, and upgrades. Of course, you can also use your HELOC for fun things, like taking vacations — and if you’re disciplined, you can pay it off in a timely manner. Taking a vacation may not be worth taking on long-term debt.
If you drew the full $50,000 from your home line of credit and paid an interest rate of 7.50%, your monthly payments over the 10-year draw period would be approximately $313. This sounds great, but remember that the interest rate is usually variable, so it will change regularly and your repayments will increase over the 20-year repayment period. A HELOC essentially becomes a 30-year loan. A HELOC is the best option if you borrow and pay off the balance over a shorter period of time.
