What's the home equity loan interest rate forecast for April 2025?

CBS News

31-03-2025

High interest rates have made borrowing money tough for Americans in recent years. Sticky
inflation
and the Federal Reserve's corresponding
rate increases
drove up costs across all loan types, putting many financial goals out of reach.
There's hope, however, if you own a home.
Home equity loan rates
have dropped over the last year, approximately, even as other financing options remain expensive. Some homeowners may now find it more affordable to use this to finance renovations, consolidate debt or even to pay for education expenses.
But the shifting economic environment could continue to impact these rates over time. What might happen to them in April 2025? We spoke with three home equity experts to get their forecasts. They share their market insights and what you should know if you're considering tapping into your home's value this spring.
Start by seeing how much home equity you could borrow here
.
The experts we spoke to predict home equity loan interest rates will hold steady in April 2025.
"I'm expecting [they] will hover around 8.3% to 8.5% — stable from where we're at now, maybe a slight dip," says Steven Glick, a licensed mortgage loan officer and director of mortgage sales at HomeAbroad, a real estate agency. This stability stems from the Federal Reserve's recent pause on rate cuts and the
10-year Treasury yield
sitting near 4.2%.
Debbie Calixto, sales manager at mortgage lender loanDepot, agrees, noting that "rates are likely to stay near the mid-to-low 8% range." She points out that while inflation is cooling and the economy shows signs of slowing, any policy shifts might not impact rates until later in the year.
See what home equity loan rate you could lock in now
.
These three factors will determine where home equity loan rates go this spring, according to industry professionals:
The Federal Reserve's decisions can influence
what you'll pay for a
home equity loan
. "Home equity rates are closely tied to the prime rate, which follows the Fed's target federal funds rate," says Chad Wilcox, senior vice president of lending at Credit Union of Colorado.
Glick emphasizes that the Fed's moves (or lack thereof) set the tone. "[The] March 19 decision to pause cuts keeps borrowing costs steady," he points out. While the connection isn't direct, Fed signals still matter. When the Fed signals cuts, it nudges lender confidence and may slightly ease rates.
Inflation trends also shape home equity loan rates. "Rates remain elevated because inflation — while down from peak levels — has been sticky," Wilcox explains. "Strong wage growth and consumer demand have made the Fed cautious, keeping lending rates higher across the board."
Current economic policies, like tariffs or spending shifts, add another layer of uncertainty to the rate outlook, Glick emphasizes. "The Fed's worried these could heat inflation, which might push lenders to bump rates to cover risk." Market watchers are monitoring April policy announcements that could signal which direction rates might head next.
Beyond Fed headlines, pay attention to what's happening in the bond market. "Long-term bond yields, especially the 10-year Treasury, serve as a key benchmark for lenders when pricing home equity loans," says Calixto.
"If it climbs — say, from tariff-driven price hikes — rates could creep up," warns Glick. "If it drops, we might see some relief." These yield movements typically happen before lenders adjust their rates. So, you get a preview of possible home equity loan costs in the coming weeks.
"Right now, American homeowners are sitting on over $34 trillion in home equity, the strongest position since just after World War II," Calixto highlights. This creates an opportunity for many homeowners, especially with home prices continuing to rise.
Also, pre-pandemic mortgage rates have created a unique situation today. "About half of mortgage holders have an interest rate under 4%," says Patrick O'Shea, a mortgage advisor at Edge Home Finance, a mortgage broker. "That makes home equity loans more attractive than a cash-out refi." If you're locked into a rate below 6%, a home equity loan lets you access cash without changing your favorable mortgage rate.
Glick has observed a steady demand for home equity loans. "People aren't selling, so they're borrowing against what they've got," he says. Lenders are responding with competitive offers, even as they maintain careful underwriting standards.
Home equity rates should remain stable through April, making this a good time to consider accessing your property's value. But O'Shea cautions against rushing into it. "Sometimes, curbing your spending or coming up with alternative ways to get out of debt is better than borrowing more money," he suggests. Meeting with a few lenders will help you understand your options and make the best decision.
Learn more about your current home equity loan options here
.