Home equity rates unchanged as the Fed holds pat on rates

No movement in home equity rates, as the Federal Reserve left interest rates unchanged at its first meeting of 2026.

The $30,000 home equity line of credit and the five-year $30,000 home equity loan were flat for the week, remaining at 7.44% and 7.92%, respectively, according to Bankrate’s national survey of lenders. As home equity rates hover at a three-year-low, Bankrate’s senior industry analyst Ted Rossman explains why conditions are improving for home equity borrowers.

“The current HELOC average, 7.44%, is the lowest in more than three years,” he says. “It’s almost three percentage points lower than it was two years ago, and there’s a good chance that figure will go under 7% this year for the first time since Sept. 2022. Also, many homeowners are sitting on record amounts of home equity.”

Home equity rates are driven primarily by two factors — Federal Reserve policy and long-term inflation expectations. The Fed left interest rates unchanged at its January meeting, as it continues to monitor inflation and the job market. Looking ahead to the rest of the year, Rossman forecasts the Fed will deliver three quarter-point cuts in 2026.

“Inflation continues to moderate, albeit slowly, and the job market appears to be stabilizing after a run-up in the unemployment rate,” he says. “Risks appear fairly balanced at the moment, and the Fed will likely take some time to determine its next move. We’re soon to get a new Fed Chairman, as well.”

Learn more: How the Federal Reserve affects HELOCs and home equity loans

Because HELOCs and home equity loans use your home as collateral, their rates tend to be much less expensive — more akin to current mortgage rates — than the interest charged on credit cards or personal loans, which aren’t secured.

While average rates are useful to know, the individual offer you receive on a particular HELOC or new home equity loan reflects additional factors, like your creditworthiness and financials. Then there’s the value of your home and the size of your ownership stake. Lenders generally limit all your home loans (including your mortgage) to a maximum of 80% to 85% of your home’s worth.