Why Waiting to Open a HELOC Might Cost You More Than You Think
If you are considering tapping into your home’s equity, waiting for the Federal Reserve to slash interest rates may not be the smartest move. In fact, for homeowners weighing their options in today’s market, opening a home equity line of credit (HELOC) now could offer more advantages than holding out for future cuts.
At the end of 2024, the Federal Reserve began trimming rates, raising hopes for even deeper cuts in 2025. However, after pausing additional action in January and skipping a meeting in February, the Fed has kept borrowers guessing. Even though inflation recently showed its first decline since September 2024, economists largely agree that no immediate changes are expected after this week’s meeting. Still, if inflation continues to cool, rate cuts could return to the conversation later this year.
For homeowners considering a HELOC, these developments are important but not necessarily a reason to wait. With average home equity levels sitting around $313,000 and HELOC interest rates dropping to two-year lows of around 8%, borrowers have a unique window of opportunity right now. HELOC rates are already about two percentage points lower than they were at the start of 2024, making it cheaper and easier to access large sums of money. Before delaying your decision in hopes of better rates, it is worth doing the math—you may find that borrowing today is already surprisingly affordable.
One of the biggest advantages of a HELOC is its variable rate structure. Unlike fixed-rate loans, HELOCs adjust with market trends. That means if the Fed does eventually lower rates later this year, existing HELOC borrowers will likely benefit without having to refinance or pay additional closing costs. Monthly rate adjustments could provide an automatic savings boost, allowing borrowers to ride the market downward without lifting a finger.
Another key point is that lenders do not always wait for official Fed announcements to adjust their rates. If market indicators point to future cuts, banks often lower their lending rates in advance. This has already been the case in recent months, with HELOC rates gradually slipping even though the federal funds rate has remained steady. So while some borrowers are holding out for a formal rate cut, lenders are already offering more competitive terms. Acting sooner rather than later could mean locking in a better deal before demand starts to push rates back up.
For homeowners considering a HELOC, there is little reason to sit on the sidelines. With rates already falling, flexible structures that reward borrowers if rates drop further, and lenders preemptively adjusting offers, there is more to lose by waiting than to gain. Of course, it is important to remember that a HELOC uses your home as collateral, and variable rates can rise just as easily as they fall. Carefully weigh your financial needs and risk tolerance. But if you are looking for cost-effective access to cash, the time to act may be now—not after the next Fed meeting.