Home Equity Loan Rates Hit 2025 Low
Home equity loan interest rates have dropped to their lowest point of 2025 this week, continuing a steady downward trend that’s been in place for the past 18 months. Now averaging just 8.23%, the rates represent a 13 basis point decrease since mid-May, according to data from Bankrate. This ongoing decline is especially notable given the broader economic context—despite a federal funds rate that’s remained unchanged since December 2024, home equity loans have grown more attractive as a borrowing option, especially compared to personal loans and credit cards, which are carrying average rates of over 12% and 22% respectively.
This new low in home equity loan rates arrives at a time when many borrowers are watching the market closely, unsure if rates will drop further or bounce back up. With the unpredictability of the interest rate environment, acting now could be a wise move. The stability that comes with a fixed-rate home equity loan offers peace of mind: borrowers can lock in the current low rate and insulate themselves from any future hikes. Even if rates fall again, the option to refinance down the line remains, making today’s fixed rates a solid, forward-looking financial strategy.
Meanwhile, HELOCs, once the more cost-effective choice, have seen their rates climb steadily in recent weeks. After dipping significantly earlier this year, HELOC rates have risen to an average of 8.20%, nearly identical to current home equity loan rates. The crucial difference is that HELOCs carry variable rates, which can fluctuate—and potentially rise—every month. For borrowers seeking predictability and protection from future rate increases, the fixed nature of a home equity loan makes it a safer and potentially cheaper long-term option.
Beyond the rates themselves, many homeowners simply can’t afford to wait. Whether the goal is home improvement, college tuition, or consolidating high-interest credit card debt, delaying necessary funding could carry a higher cost. With credit card interest rates nearly triple those of current home equity loan rates, using equity to pay off that debt now could save thousands over time. And with rates lower than they’ve been all year, the case for acting now becomes even stronger.
As 2025 unfolds and the interest rate landscape remains in flux, home equity loans are presenting a timely opportunity for qualified homeowners. With rates at their lowest, HELOCs losing their edge, and immediate financial needs on the rise, securing a fixed-rate home equity loan now may be one of the most financially savvy moves available. Of course, this decision isn’t without risk—since your home secures the loan, any missed payments could lead to foreclosure. That’s why careful budgeting, rate comparison, and responsible borrowing are key to making this opportunity work in your favor.