Homeowners Find Lower-Cost Borrowing Through HELOCs and Equity Loans
Average rates for home equity lines of credit and loans are currently in the high single digits, making them cheaper than many alternatives.
With personal loan rates stuck in the double-digit range, borrowers are turning to home equity products for more affordable financing. Nationwide averages place home equity loan and HELOC rates in the high single-digit bracket, and future cuts to the federal funds rate could push them lower. A home equity loan delivers a lump sum that must be repaid immediately, while a HELOC offers a revolving line of credit with variable rates and interest-only payments during an initial draw period.
Both options can yield tax-deductible interest if used for eligible expenses, but the property remains at risk if payments are missed. Because rates and terms differ across lenders, borrowers are advised to shop around to secure the best deal for their financial goals.
Why it matters
Lower-cost home equity financing offers a viable alternative for borrowers facing high personal loan rates.
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