Home equity loan rates and home equity line of credit rates are hovering near one-year lows, offering homeowners an opportunity to tap into the nearly $34 trillion in equity Americans hold in their properties. According to real estate analytics firm Curinos, the national average HELOC rate currently stands at 7.23%, while home equity loan rates average 7.44%, creating favorable conditions for well-qualified borrowers seeking second mortgage products.
The average HELOC rate has decreased by just two basis points from one month ago, placing it only four basis points above the 52-week low of 7.19%. Meanwhile, home equity loan rates have dropped 12 basis points from the previous month, sitting just six basis points above the early December 2025 low of 7.38%. These rates apply to applicants with a minimum credit score of 780 and a combined loan-to-value ratio below 70%, according to Curinos data.
Why Second Mortgage Products Appeal to Homeowners
With primary mortgage rates remaining in the low-6% range, homeowners who locked in rates of 5% or lower during previous years face a significant dilemma. Selling their homes or pursuing a cash-out refinance would mean abandoning favorable mortgage terms, making second mortgage products an attractive alternative for accessing home equity.
The Federal Reserve reports that homeowners held nearly $34 trillion in equity at the end of the third quarter of 2025. This substantial wealth reservoir remains largely untapped as homeowners resist giving up low-rate primary mortgages. Additionally, second mortgage products allow borrowers to access funds while preserving their existing mortgage terms.
Understanding Home Equity Interest Rates
Home equity interest rates operate differently from traditional mortgage rates. Second mortgage rates are calculated using an index rate, often the prime rate currently at 6.75%, plus a lender-determined margin. For example, a lender adding a 0.75% margin would result in a HELOC variable rate of 7.50%.
However, home equity loans typically carry fixed interest rates with potentially different margins since they provide lump-sum financing rather than revolving credit. Lenders maintain flexibility in pricing these products based on individual borrower profiles, including credit scores, existing debt levels, and loan-to-value ratios.
Shopping for the Best Home Equity Loan Rates
Rate variation among lenders remains substantial, with offers ranging from 6% to as high as 18% depending on creditworthiness and market positioning. According to industry data, diligent shoppers who compare offers from two or three lenders can often secure rates below national averages. FourLeaf Credit Union, for instance, currently offers an introductory HELOC APR of 5.99% for 12 months on lines up to $500,000, though this converts to a variable rate afterward.
In contrast to HELOCs, home equity loans may prove easier to evaluate since their fixed rates remain constant throughout the repayment period. Borrowers receive lump-sum distributions without concerns about minimum draw requirements that some HELOC lenders impose. Nevertheless, comparing fees, repayment terms, and total costs across multiple lenders remains essential for both product types.
Payment Considerations and Loan Structure
A $50,000 HELOC withdrawal at 7.50% interest would require approximately $313 in monthly payments during the typical 10-year draw period. However, payments increase substantially during the subsequent 20-year repayment phase, effectively creating a 30-year obligation. The variable-rate nature of most HELOCs means periodic rate adjustments that directly impact payment amounts.
Home equity products work best when borrowers can repay balances within shorter timeframes rather than carrying debt across the full loan term. Homeowners commonly use these funds for home improvements, repairs, and upgrades, though lenders typically permit borrowers to use withdrawn equity for virtually any purpose.
Interest rates declined throughout most of 2025 and are expected to remain relatively steady through the first half of 2026, according to market forecasts. The stability in second mortgage rates may continue in the near term, though economic conditions and Federal Reserve policy decisions could influence future pricing.
