10:26 pm - February 4, 2026
Home equity loan rates and home equity lines of credit continue to hover near 7.5%, according to recent market data, while some lenders are offering promotional introductory rates as low as 5%. The current national average rate for a HELOC stands at 7.25%, while home equity loans average 7.56%, according to data analytics company Curinos. These rates apply to borrowers with a minimum credit score of 780 and a maximum combined loan-to-value ratio of 70%.
Among current offerings, Fifth Third Bank is promoting a 4.99% introductory rate for six months on home equity lines of credit. Meanwhile, FourLeaf Credit Union is advertising a HELOC rate of 5.99% for 12 months on credit lines up to $500,000, which will adjust to a variable rate of 7.25% after the promotional period expires.
Why Home Equity Borrowing Remains Attractive
The Federal Reserve estimates that American homeowners hold approximately $34 trillion in home equity as of the third quarter of 2025, approaching record highs. However, with primary mortgage rates hovering around 6%, many homeowners are reluctant to refinance or sell their properties. This situation makes second mortgages an increasingly appealing option for accessing home value without sacrificing favorable existing mortgage terms.
Additionally, homeowners locked into low-rate primary mortgages from previous years find that cash-out refinancing would mean giving up those advantageous rates. A home equity line of credit or home equity loan allows borrowers to tap their equity while preserving their original mortgage terms.
How Home Equity Rates Are Determined
Unlike primary mortgage rates, home equity interest rates are typically calculated using an index rate plus a lender margin. HELOCs commonly use the prime rate as their index, which currently sits at 6.75% following three Federal Reserve rate cuts. If a lender adds a 0.75% margin to this base rate, the resulting HELOC rate would be 7.50%.
In contrast, home equity loans typically carry fixed interest rates and may have different margin structures. Because these are fixed-rate products, home equity loans are less likely to feature introductory teaser rates compared to their HELOC counterparts.
Shopping for the Best Rates
Lenders maintain significant pricing flexibility with second mortgage products, making comparison shopping essential for borrowers. Individual rates depend on factors including credit score, existing debt obligations, and the requested credit line amount relative to home value. National average rates often include promotional introductory offers that may last six months to one year before converting to higher variable rates.
Furthermore, borrowers should carefully examine both the introductory and post-promotional rates when evaluating HELOC options. The gap between these rates can be substantial and significantly impact long-term borrowing costs.
Understanding Payment Structures
For a typical $50,000 home equity line of credit at 7.50% interest, monthly payments during the 10-year draw period would amount to approximately $313. However, because HELOC rates are usually variable, payments can fluctuate over time and typically increase during the 20-year repayment period that follows the draw period. This structure effectively creates a 30-year loan term.
Home equity loans, with their fixed rates and lump-sum disbursement, offer more predictable payment schedules throughout the repayment period. Borrowers should also compare fees and review repayment term details carefully when evaluating different lender options.
The direction of home equity rates in coming months will largely depend on future Federal Reserve policy decisions and broader economic conditions. Borrowers considering these products should monitor rate trends and compare multiple lenders to secure the most favorable terms for their financial situation.
