Overview
- The Federal Reserve left its benchmark federal funds rate at 3.5%–3.75% at its June meeting this week, and officials signaled a greater chance of future hikes if inflation stays hot.
- HELOCs and home equity loans have ticked up after months of declines, with typical HELOC rates just over 7% and fixed home equity loans around 6.98% to 8% depending on term and survey.
- HELOCs carry variable rates tied to the prime rate so they would need a Fed cut to fall materially, while home equity loans offer a fixed, lower-cost option versus unsecured credit.
- Experts say a meaningful drop in home-equity borrowing costs this summer is unlikely unless inflation falls, the Iran conflict eases, or the job market cools, and they see more risk that rates hold or rise.
- For borrowers, using home equity for debt consolidation or home improvements currently offers a large interest-rate advantage over credit cards and can lock in predictable payments when stability is the priority.