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A downward trend in the home equity borrowing interest rate climate has reversed course in recent weeks, with rates on both home equity loans and home equity lines of credit (HELOCs) stalling. Currently, the average HELOC rate is 8.27% while the median home equity loan rate sits at 8.26%, according to Bankrate. This comes after HELOCs sat comfortably below 8% earlier in 2025 and after rates on both products slowly but steadily declined for much of 2024.
Still, rates on both products are materially lower than what can be secured with a credit card or personal loan. And both offer borrowers a clear path to borrow a six-figure amount of money, thanks to an average home equity level of over $300,000 right now. But with rates flat at the moment, prospective borrowers may not be sure of the next steps to take.
This pause, however, can be used strategically if homeowners approach it smartly. Below, we’ll examine three steps to take now with HELOC and home equity loan interest rates in a holding pattern.
Start by seeing how low a home equity loan rate you’d be eligible for here.
What homeowners should do with HELOC and home equity loan rates flat
Instead of waiting for the home equity borrowing rate climate to change on the sidelines, potential borrowers should use this lull to their advantage. Specifically, they should consider doing the following now:
Check their credit report (and improve their credit score)
Having a home that will serve as collateral in these borrowing exchanges is just part of the equation. Lenders will still want to make sure that you’re a responsible borrower and to determine that, they’ll want to pull your credit report and check your credit score. Get a head start, then, by doing it yourself.
Check your report to make sure it accurately reflects the state of your current credit health and dispute any errors or inaccuracies, if discovered. While you’re at it, check your credit score, too, and begin working on that (if needed). Remember that the best home equity loan and HELOC rates and terms will be reserved for those borrowers with the cleanest credit profiles. Do your due diligence now, then, so that you can become a more attractive borrower when rates inevitably fall again.
Learn more about borrowing from your home equity now.
Shop for lenders to see who has the most competitive offers
Home equity borrowers don’t need to automatically use the same lender that holds their mortgage, and in many instances, they shouldn’t. Use this time to shop around for lenders to see which has the most competitive offer. Yes, you may still want to wait for rates to decline, and understandably so. But the lender that has the lowest rates and most attractive terms now, in mid-July, is likely to be the same one with those benefits when rates drop again.
Take the time to find out which lender this is now, however, so you’re ready to act when the rate climate turns. Waiting to shop around could be the difference between being able to lock in a low rate and missing out on one.
Decide between a HELOC and a home equity loan
HELOC and home equity loan interest rates are virtually identical right now. But, historically, they tend to diverge, sometimes to significant degrees. It’s not just a difference in rates, however. It’s also a difference in rate structure, as HELOCs have variable rates that will change monthly for borrowers based on market conditions. They also typically require borrowers to make interest-only payments during the draw period.
Home equity loan rates, however, are fixed. And full repayments will be mandated from the start as the full loan amount will be disbursed in a lump sum, unlike a HELOC, which works like a revolving line of credit. At the same time, both products have attractive tax benefits when used for select purposes. Take this time, then, to closely compare and contrast each product. With your home functioning as collateral, it’s critical to choose the one that best serves your needs and fits your budget.
The bottom line
Home equity loan and HELOC interest rates may feel a bit stagnant right now, but that will change, perhaps sooner than anticipated. Strategic home equity borrowers will be ready when it does, however, if they use this time to make the above three moves. So don’t sit idle. By checking your credit report, boosting your credit score, shopping for lenders and comparing both HELOCs and home equity loans, you’ll go a long way toward improving your overall chances of borrowing success.
