Home Equity Loan Rates Hold Steady as Borrowing Demand Stays Strong
Home equity borrowing costs showed little movement this week, with most products holding near recent lows. According to Bankrate’s national survey, the average rate on a $30,000 home equity line of credit (HELOC) stayed at 8.12%, while the average rate on a five-year, $30,000 home equity loan remained unchanged at 8.23% — the lowest level seen in 2025. Longer-term loan products ticked slightly lower but continue to hover above 8%.
These relatively stable rates come at a time when many homeowners are increasingly looking to tap into their housing wealth. Industry data shows that home equity loan originations have been robust this year, supported by record levels of equity growth. But experts caution that approval depends on more than available equity. “The approval on a home equity loan or a HELOC is ultimately made on whether you can afford to repay the loan,” explains Sarah Rose, senior home equity manager at Affinity Federal Credit Union. “A lot of people assume that equity alone guarantees approval, but lenders always look at the borrower’s overall financial profile.”
The direction of HELOC and home equity loan rates remains tied closely to both lender competition and Federal Reserve policy. Variable-rate products, in particular, respond directly to Fed decisions. After climbing sharply in 2024, rates have eased substantially this year, though they remain well above pre-pandemic norms. Bankrate’s chief financial analyst Greg McBride still expects further declines in 2025, forecasting that HELOCs could average 7.25% and home equity loans around 7.90% if the Fed resumes rate cuts in the latter half of the year.
Even at current levels, borrowing against home equity remains less expensive than unsecured credit. Credit cards are carrying average rates above 20%, and personal loans are averaging around 12.5%, compared with just over 8% for secured home equity products. That said, McBride warns homeowners not to view these loans as cheap money. “Many homeowners are sitting on a mountain of home equity, but borrowing against it is still costly,” he said. “This is not the low-cost form of borrowing that homeowners had become accustomed to for many years. So if you must borrow, have a game plan for paying it back.”
The appetite for home equity borrowing remains strong. A new Bankrate study found that home equity nationwide has surged 142% since 2020, while ATTOM Data Solutions reports that nearly half of all mortgaged residential properties are now considered equity-rich. Federal Reserve Bank of New York data shows HELOC balances have grown for 13 straight quarters, hitting $411 billion in Q2 2025. Meanwhile, TransUnion reported that the home equity market as a whole grew 12% in Q1 2025, the fastest pace in more than two years.
With home values climbing and many households equity-rich, homeowners have more flexibility than ever to leverage their property. Still, financial planners urge caution: while borrowing can be useful for funding renovations, consolidating higher-interest debt, or covering big-ticket expenses, today’s rates demand careful planning to avoid long-term financial strain.