Lenders are increasingly adjusting their home equity lines of credit (HELOC) rates downward, making these financial products more appealing for homeowners. Recently, Bank of America, a major player in the HELOC market, announced it has reduced its rates nationwide, with the new rates ranging from 7.3% to 8.84%, depending on the borrower’s location.
Data from Curinos reveals that the average weekly HELOC rate currently stands at 7.44%. This figure is based on applicants holding a minimum credit score of 780 and a maximum combined loan-to-value (CLTV) ratio of less than 70%. This trend comes at a time when homeowners are sitting on an unprecedented amount of home equity, with nearly $36 trillion recorded at the end of the second quarter of 2025, according to the Federal Reserve. This figure represents the highest amount of home equity ever recorded.
Given that mortgage rates remain relatively low—hovering in the low-6% range—homeowners are likely to hold onto their primary mortgages for the foreseeable future. Selling their homes may not be a viable option, especially when they can retain lower rates around 3% to 5%. A HELOC serves as a practical alternative, allowing homeowners to tap into their home equity without sacrificing their existing mortgage benefits.
Understanding HELOC interest rates is crucial for potential borrowers. Unlike primary mortgage rates, HELOCs are based on an index rate plus a margin, often aligned with the prime rate, which currently sits at 6.75%. For instance, a lender that applies a 0.75% margin would mean an HELOC rate of 7.50%. Homeowners should be aware that lenders have considerable flexibility in pricing these products, making it essential to shop around for the best rates. Borrowers should factor in their credit scores, existing debt, and the proportion of their credit line to the home’s value.
Potential borrowers should also pay close attention to promotional “introductory” rates that are typically lower but may only last for a limited time—usually from six months to a year. After this period, the interest rate could adjust to a significantly higher rate.
HELOCs benefit homeowners by enabling them to access the equity in their homes without the need to refinance their low-rate first mortgages. The best lenders offer minimal fees, options for fixed-rate HELOCs, and large credit lines, enhancing the flexibility for borrowers. HELOCs allow homeowners to withdraw funds as needed, and they only incur interest on the amount they actually borrow.
One noteworthy offer comes from FourLeaf Credit Union, which is currently providing a HELOC with an annual percentage rate (APR) of 5.99% for the first year on lines up to $500,000. As with any financial commitment, borrowers should thoroughly compare rates, fees, repayment terms, and the minimum draw amounts required by different lenders.
Ultimately, accessing home equity through a HELOC can be a smart move for homeowners with significant equity and low primary mortgage rates. This strategy enables them to fund home improvements, repairs, and other expenditures, while retaining their existing low mortgage rates. By effectively managing their borrowing, homeowners can utilize their property not only as a place to live but also as a valuable financial asset.