Latest news with #homeEquity
Yahoo
4 days ago
- Business
- Yahoo
HELOC rates today, May 30, 2025: Interest rates edge slightly higher
HELOC rates edged slightly higher today, as tariffs were off, and then on again Thursday, with conflicting decisions from two authorities bouncing edicts back and forth. President Trump also met with Fed Chairman Jerome Powell, making it clear he wanted to see interest rate cuts sooner rather than later. Powell apparently made no promises. In a statement, the Fed said the chairman "did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook." Here's how that news impacted home equity line of credit interest rates today. Dig deeper: HELOC vs. home equity loan: Tapping your equity without refinancing According to Zillow, rates on a 10-year HELOC are up two basis points to 6.89% today. The same rate is also available on 15- and 20-year HELOCS. VA-backed HELOCs dropped four basis points to 6.34%. Homeowners have a staggering amount of value tied up in their houses — more than $34 trillion at the end of 2024, according to the Federal Reserve. That's the third-largest amount of home equity on record. With mortgage rates lingering in the high 6% range, homeowners are not going to let go of their primary mortgage anytime soon, so selling a house may not be an option. Why let go of your 5%, 4% — or even 3% mortgage? Accessing some of that value with a use-it-as-you-need-it HELOC can be an excellent alternative. HELOC interest rates are different from primary mortgage rates. Second mortgage rates are based on an index rate plus a margin. That index is often the prime rate, which today is 7.50%. If a lender added 1% as a margin, the HELOC would have a rate of 8.50%. However, you will find reported HELOC rates are much lower than that. That's because lenders have flexibility with pricing on a second mortgage product, such as a HELOC or home equity loan. Your rate will depend on your credit score, the amount of debt you carry, and the amount of your credit line compared to the value of your home. And average national HELOC rates can include "introductory" rates that may only last for six months or one year. After that, your interest rate will become adjustable, likely beginning at a substantially higher rate. You don't have to give up your low-rate mortgage to access the equity in your home. Keep your primary mortgage and consider a second mortgage, such as a home equity line of credit. The best HELOC lenders offer low fees, a fixed-rate option, and generous credit lines. A HELOC allows you to easily use your home equity in any way and in any amount you choose, up to your credit line limit. Pull some out; pay it back. Repeat. Meanwhile, you're paying down your low-interest-rate primary mortgage like the wealth-building machine you are. Today, Lending Tree is advertising a 6.63% rate on a HELOC. That's likely an introductory rate that will convert to a variable rate later. When shopping lenders, be aware of both rates. And as always, compare fees, repayment terms, and the minimum draw amount. The draw is the amount of money a lender requires you to initially take from your equity. The power of a HELOC is tapping only what you need and leaving some of your line of credit available for future needs. You don't pay interest on what you don't borrow. Rates vary so much from one lender to the next that it's hard to pin down a magic number. You may see rates from nearly 7% to as much as 18%. It really depends on your creditworthiness and how diligent a shopper you are. For homeowners with low primary mortgage rates and a chunk of equity in their house, it's probably one of the best times to get a HELOC. You don't give up that great mortgage rate, and you can use the cash drawn from your equity for things like home improvements, repairs, and upgrades. Of course, you can use a HELOC for fun things too, like a vacation — if you have the discipline to pay it off promptly. A vacation is likely not worth taking on long-term debt. If you take out the full $50,000 from a line of credit on a $400,000 home, your payment may be around $395 per month with a variable interest rate beginning at 8.75%. That's for a HELOC with a 10-year draw period and a 20-year repayment period. That sounds good, but remember, it winds up being a 30-year loan. HELOCs are best if you borrow and pay back the balance in a much shorter period of time.
Yahoo
4 days ago
- Business
- Yahoo
HELOC rates today, May 31, 2025: Interest rates on HELOCs fall as inflation cools
HELOC rates fell today, as Friday's inflation report showed consumer prices still cooling. This gives the Federal Reserve a little breathing room to continue a pause on further interest rate cuts. The FOMC is expected to skip a June rate decrease, and is widely believed to wait until September for further rate relief. However, HELOC rates are more demand-driven than mortgage rates, with bank and credit union deposits funding most home equity line of credit accounts. This gives depository institutions more latitude in competitive pricing. Dig deeper: HELOC vs. home equity loan: Tapping your equity without refinancing According to Zillow, rates on a 10-year HELOC are down five basis points to 6.84% today. The same rate is also available on 15- and 20-year HELOCS. VA-backed HELOCs moved up two basis points to 6.36%. Homeowners have a staggering amount of value tied up in their houses — more than $34 trillion at the end of 2024, according to the Federal Reserve. That's the third-largest amount of home equity on record. With mortgage rates lingering in the high 6% range, homeowners are not going to let go of their primary mortgage anytime soon, so selling a house may not be an option. Why let go of your 5%, 4% — or even 3% mortgage? Accessing some of that value with a use-it-as-you-need-it HELOC can be an excellent alternative. HELOC interest rates are different from primary mortgage rates. Second mortgage rates are based on an index rate plus a margin. That index is often the prime rate, which today is 7.50%. If a lender added 1% as a margin, the HELOC would have a rate of 8.50%. However, you will find reported HELOC rates are much lower than that. That's because lenders have flexibility with pricing on a second mortgage product, such as a HELOC or home equity loan. Your rate will depend on your credit score, the amount of debt you carry, and the amount of your credit line compared to the value of your home. And average national HELOC rates can include "introductory" rates that may only last for six months or one year. After that, your interest rate will become adjustable, likely beginning at a substantially higher rate. You don't have to give up your low-rate mortgage to access the equity in your home. Keep your primary mortgage and consider a second mortgage, such as a home equity line of credit. The best HELOC lenders offer low fees, a fixed-rate option, and generous credit lines. A HELOC allows you to easily use your home equity in any way and in any amount you choose, up to your credit line limit. Pull some out; pay it back. Repeat. Meanwhile, you're paying down your low-interest-rate primary mortgage like the wealth-building machine you are. Today, FourLeaf Credit Union is offering a HELOC rate of 6.49% for 12 months on lines up to $500,000. That's an introductory rate that will convert to a variable rate later. When shopping lenders, be aware of both rates. And as always, compare fees, repayment terms, and the minimum draw amount. The draw is the amount of money a lender requires you to initially take from your equity. The power of a HELOC is tapping only what you need and leaving some of your line of credit available for future needs. You don't pay interest on what you don't borrow. Rates vary so much from one lender to the next that it's hard to pin down a magic number. You may see rates from nearly 7% to as much as 18%. It really depends on your creditworthiness and how diligent a shopper you are. For homeowners with low primary mortgage rates and a chunk of equity in their house, it's probably one of the best times to get a HELOC. You don't give up that great mortgage rate, and you can use the cash drawn from your equity for things like home improvements, repairs, and upgrades. Of course, you can use a HELOC for fun things too, like a vacation — if you have the discipline to pay it off promptly. A vacation is likely not worth taking on long-term debt. If you take out the full $50,000 from a line of credit on a $400,000 home, your payment may be around $395 per month with a variable interest rate beginning at 8.75%. That's for a HELOC with a 10-year draw period and a 20-year repayment period. That sounds good, but remember, it winds up being a 30-year loan. HELOCs are best if you borrow and pay back the balance in a much shorter period of time.
CBS News
5 days ago
- Business
- CBS News
HELOC rates are falling again. Here's what to consider now.
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. HELOC interest rates are declining again, new data released this week shows. Getty Images After some minor increases earlier in May, interest rates on home equity lines of credit (HELOCs) reversed course and declined again this week, according to new Bankrate data. Now, at an average rate of 8.14%, rates dropped by six basis points, allowing HELOCs to maintain their position as one of the cheapest ways to borrow money right now. They're less expensive than home equity loans, which remained flat this week at an average rate of 8.24% and materially cheaper than personal loans (over 12% currently) and credit cards (around 21%). And with the average home equity amount around $313,000 right now, there's likely plenty of money to utilize while still maintaining a healthy equity buffer in the home. Still, borrowing from your home equity isn't risk-free, and with a HELOC, which has a variable rate, some volatility should be priced in to avoid surprises. But with rates here low again, many would benefit from using this specific borrowing product. It just helps to know some timely considerations before securing the line of credit. Below, we'll detail what to consider right now. Start by seeing how low a HELOC rate you'd be eligible for here. What to consider with HELOC rates falling again Here are three items to consider with HELOC rates falling back toward 8% again: Rates here could rise or fall unexpectedly Earlier in 2025, it felt like HELOC rates would never stop declining. They hit an 18-month low. Then a two-year low and then another, new two-year low. But that drop stopped in recent weeks and rates here actually rose a bit since. And that's something that will impact borrowers even after the HELOC is secured, as variable rates will change monthly, perhaps in an unexpected way. So don't let a lower rate lull you into a false sense of complacency. Rates here could continue to fall … or they could rise again. Be prepared for either. That said, overall, HELOC rates are down by around two full percentage points since September 2024, so the larger trend is still a positive one for borrowers. Compare HELOC rates and offers here to see which is most affordable. Long-term affordability will need to be closely calculated Do you know how much you want to borrow with a HELOC? Because of these recent rate changes and because you'll need to make repayments no matter how dramatically the rate changes over time, it's important to calculate long-term affordability closely. For example, if you want to borrow with a $50,000 HELOC, don't just do the math tied to today's average rates. Calculate repayments against higher rates in the future and, potentially, lower ones as well. This will give you a better idea of long-term affordability, which is critical when your home is the funding source to avoid the risk of foreclosure. You could refinance into a home equity loan Want to take advantage of today's low HELOC rates but are nervous about your ability to make repayments should rates spike again? Then consider the HELOC now, and keep in mind that you could refinance it into a home equity loan (with a fixed interest rate) in the future. Just be sure to clarify with your HELOC lender before getting started, as eligibility criteria and requirements can vary from lender to lender. And understand that that may require you to forego a lower HELOC rate for a slightly higher home equity loan rate. Still, at that point, the exchange may be worthwhile if paying a changing HELOC rate each month becomes too stressful (and expensive). The bottom line With HELOC interest rates on the decline again, homeowners contemplating the use of this product may be ready to get started. By keeping these three timely considerations in mind, however, they'll be able to make a more informed decision, positioning themselves for home equity borrowing success both in today's rate climate and, theoretically, over the extended repayment period of a decade or more.
CBS News
16-05-2025
- Business
- CBS News
How have HELOC interest rates changed in 2025?
HELOC interest rates have risen and fallen, sometimes to a significant degree, in recent months. Getty Images Interest rates were in the news yet again this month after the Federal Reserve completed its third meeting of 2025 and, for the third time in a row, elected to keep the federal funds rate unchanged. At a range between 4.25% and 4.50% currently, the rate has remained frozen since December 2024 when the bank cut it by 25 basis points, following two earlier cuts earlier in 2024. These developments have led to changes in rates for both savers and borrowers, the latter perhaps most significantly seen with home equity borrowing. Rates on home equity lines of credit (HELOCs), specifically, have changed dramatically since last September and they're moving in new ways now, as we head into the summer months. These trends are particularly important to note when borrowing with a HELOC, as it has a variable interest rate that can change each month for borrowers. That means HELOCs could become more or less expensive, perhaps sooner than expected. To better understand this potential, then, it can help to first understand how HELOC interest rates have changed so far in 2025. Below, we'll detail that progression alongside what to expect next. Start by seeing what HELOC rate you could qualify for here now. How have HELOC interest rates changed in 2025? To appreciate the changes in the HELOC interest rate climate that have taken place in the opening months of 2025, it first helps to remember where HELOC rates were last fall, specifically last September. That's when the average rate on a $30,000 HELOC was located just under the double digits (9.99%, to be precise). In the months that followed, however, HELOCs steadily became more affordable. In October, that same rate dropped to 8.94%, then it fell again to 8.70% in November and 8.55% in December. That downward trend has largely continued in 2025. HELOC rates fell to an 18-month low in January, hitting 8.27%. That was followed by another drop in February to 8.12%, at that point a two-year low in the HELOC rate space. That was soon surpassed by a new, two-year low in March when HELOC rates declined again to 8.03%. And by early April, HELOC rates were comfortably under 8%, registering with an average of just 7.90% on April 3 – more than two full percentage points from where they were in September. This made a HELOC not only the cheapest way to borrow home equity but also one of the cheapest ways to borrow money overall, with interest rates on alternatives like personal loans and credit cards many percentage points higher. Since early April, however, HELOC rates have responded to market conditions by increasing slightly. They moved up to 7.95% at the end of the month and then increased in a not insignificant way to 7.99% and then 8.14% in the first half of May, according to Bankrate data. Overall, however, rates are still down from where they started in 2025, and they're significantly lower than they were in September 2024 and even lower than the 10.16% they were found at in January 2024. So, if you need to borrow money now and want to do so at a relatively low interest rate, a HELOC could be one of your better borrowing options in 2025. Get started with a HELOC online today. Why a HELOC makes sense now It may be tempting to dismiss the use of a HELOC based on very recent rate increases. But, overall, HELOCs are still relatively affordable, particularly compared to the 12% rates personal loans come with and the nearly 23% rate credit cards do (a record high). Home equity loans, on the other hand, have higher rates than HELOCs at 8.36%. Additionally, home equity loan rates are fixed and not well-positioned to exploit predicted rate cuts to come later this year, perhaps as early as summer. But HELOCs are, as they'll adjust independently for borrowers. Not only will this result in lower payments, should rates decline, but it will save homeowners the costs of refinancing that they would otherwise have to pay if they wanted to secure a lower home equity loan rate. This all noted, HELOC rates can rise as easily as they can fall, so some volatility should be priced in before getting started. The bottom line HELOC interest rates have been on a decline for much of the last year or so but recent increases there underline the fluidity of this borrowing product and savvy homeowners should account for changes before getting started. Still, with rates on alternatives materially higher and with the likelihood of rate cuts later this year strong as of mid-May, homeowners who need additional financing right now would be hard-pressed to find a better, less expensive option.
CBS News
06-05-2025
- Business
- CBS News
Will HELOC interest rates fall again this week?
The costs of borrowing home equity with a HELOC have steadily declined this year. Getty Images It's become an almost weekly item at this point. While interest rates remain elevated on a variety of borrowing products, they've been in a steady decline on home equity lines of credit (HELOCs) for more than a year now. While HELOC rates fell for much of 2024, that decline has been substantial over the past seven months, approximately, with rates here falling to their lowest point since 2023. Now, at just an average of 7.95%, HELOC rates are down more than two full percentage points since September 2024, making them not only the cheapest way to borrow home equity right now but one of the cheapest ways to borrow money altogether. Still, it's important to remember that HELOC rates can change, even for existing borrowers, thanks to a variable interest rate often adjusted monthly by lenders. So this fluidity will need to be accounted for closely to determine long-term affordability. It helps, then, to analyze the short-term future of these rates, particularly this week, as the Federal Reserve meets again for the first time since March. A rate cut courtesy of the central bank, or even a hint toward one, could be powerful enough to cause HELOC rates to decline again. But the opposite actions or comments could have a rising effect. So, will HELOC interest rates fall again this week? That's what we'll analyze below. See how low a HELOC rate you could qualify for here. Will HELOC interest rates fall again this week? It's critical to remember that predicting the future of interest rates is inherently risky, as any unforeseen factors could cause rates to move upward or downward. That said, HELOC interest rates, at least on the surface, are unlikely to adjust much (or at all) this week. That's because the central bank is widely expected to keep its federal funds rate unchanged at the current range between 4.25% and 4.50%. A continued pause in that rate, then, will do little to change HELOC rates. In fact, many lenders may have already priced into this presumed pause into their current offers, hence the reason why HELOC rates have stayed relatively flat, just under 8%, in recent weeks. That noted, the comments made by Federal Reserve Chairman Jerome Powell after the Fed's meeting on Wednesday could cause HELOC rates to shift, even if a formal rate cut doesn't take place this May. Powell's comments will address the future of rate cuts at the Fed's next meetings in June and July. Should he seem optimistic or even cautiously optimistic that rate cuts could be more realistic in one or both of those meetings, then the rate climate could shift slightly to accommodate that vision – and HELOC rates may fall in response, too. At the same time, any comments there regarding higher rates for longer could cause the opposite to happen. For what it's worth, the CME Group's FedWatch tool has a fed rate cut pinned to a meager 3.1% chance this week. But that rises to around 30% for its June meeting and over 70% for its July meeting. So while a rate cut may not occur this week and, accordingly, HELOC rates may remain steady, additional cuts and declines do look likely for the months ahead. Of course, HELOC users and interested borrowers won't need to wait for those declines as they would with a fixed-rate product, as HELOC rates will adjust independently each month anyway. So, if you know you need the financing and have selected a HELOC as the way to access it, it makes sense to get started now anyway. Start shopping for low-rate HELOCs and lenders online today. The bottom line HELOC interest rates are likely to stay steady this week, even with the latest Fed meeting set to conclude on Wednesday. But that's not necessarily a bad thing. With HELOC rates already lower than what's available with a home equity loan, personal loan, or credit card, a HELOC is likely your most cost-effective borrowing option right now. And with the average home equity amount over $300,000 currently, there's likely plenty to borrow, too. So, consider getting started with the process today and be sure to monitor the rate climate daily to see if a decline in rates materializes in the form of less expensive HELOC costs for you.
