Home / Business and Economy / Unlock Home Equity: HELOC Rates Plummet Below 7.5%!
Unlock Home Equity: HELOC Rates Plummet Below 7.5%!
14 Dec
Summary
- Average HELOC rates are below 7.5% and falling nationally.
- Homeowners have a record $36 trillion in home equity.
- HELOCs offer access to equity without losing low mortgage rates.
Homeowners can now access their home equity more affordably, as national average interest rates for home equity lines of credit (HELOCs) have dropped below 7.5%. This decrease is attributed to lenders adjusting pricing to the new, lower prime rate of 6.75%. With homeowners holding a record $36 trillion in home equity, HELOCs present a compelling alternative to selling or refinancing, especially when primary mortgage rates remain elevated.
HELOC interest rates function differently from primary mortgages, typically based on an index rate plus a margin. The prime rate's recent drop to 6.75% has lowered potential HELOC rates. Lenders offer flexibility in pricing, making it crucial for consumers to shop around. Factors like credit score, debt levels, and loan-to-value ratio significantly influence the final rate. It's also important to be aware of potential introductory rates that may increase after an initial period.
Using a HELOC allows homeowners to leverage their home equity without affecting their existing low-interest primary mortgage. This flexible line of credit can be drawn upon as needed, with interest only accruing on borrowed amounts. While current rates are attractive, borrowers must prepare for potential variable rate adjustments. Careful comparison of fees, repayment terms, and minimum draw requirements is essential before proceeding.
