Average HELOC and Home Equity Loan Rates for Week of June 8, 2022


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Home equity loan and line of credit (HELOC) rates moved in different directions this week.

Here are the average rates as of June 8, 2022: 

Loan Type This Week’s Rate Last Week’s Rate Difference
$30,000 HELOC 4.45% 4.35% 0.10%
10-year, $30,000 home equity loan 6.71% 6.73% 0.02%
15-year, $30,000 home equity loan 6.68% 6.69% 0.01%

How These Rates Are Calculated

These rates come from a survey conducted by Bankrate, which like NextAdvisor is owned by Red Ventures. The averages are determined from a survey of the top 10 banks in the top 10 U.S. markets.

What’s Happening With Home Equity Loans and HELOC Rates?

Experts say you should expect interest rates for home equity loans and HELOCs to climb through the end of 2022. For HELOCs that base their variable rate on the prime rate, those changes are fairly easy to predict as the prime rate tends to follow increases in short-term interest rates by the Federal Reserve. The Fed is expected to keep raising its benchmark rate to combat high inflation. “We’re in a rising rate environment,” Vikram Gupta, head of home equity for PNC Bank, told us. “It’s tied to an index that is going up, ergo the rate will go up.”

Interest rates for home equity loans are set more like mortgage rates, and are also expected to keep climbing as banks’ borrowing costs increase. One factor that could slow that is if fears of a recession affect interest rates, Rob Cook, vice president of marketing, digital and analytics for Discover Home Loans, told us. “My outlook is it will either be flat or an upward trend for rates in the course of this year.”

Another notable trend with home equity lending is that consumers are increasingly turning to these products to borrow money. Part of that is due to the recent dramatic increases in mortgage rates, which have made cash-out refinances less attractive. Cash-out refis were very common in recent years as mortgage rates were at record lows and home prices increased, but mortgage rates have risen about two percentage points since the start of the year, making consumers far less likely to want to take on a worse mortgage rate just to take out some cash.

What Are Home Equity Loans and HELOCs?

When your home is worth more than what you owe on mortgages and other home loans, that difference is called equity. With a home equity loan or HELOC, you use that equity as collateral to borrow money, often for big home improvement projects or other major expenses. 

Pro Tip

Be careful when taking out home equity loans. If the value of your home drops and you try to sell, you may end up owing more than you get at closing.

Home equity loans and HELOCs work differently:

Home equity loans function similarly to a fixed-rate mortgage, in which you borrow a lump sum of cash up front and pay it back in installments over a set number of years at a set interest rate. 

HELOCs are more like credit cards, in that the bank gives you a maximum amount you can borrow at once during a draw period – a line of credit – and you can take out some, pay it back, and borrow more until the draw period ends. You’ll pay interest only on what you borrow. The interest rate is usually variable, meaning it will change over time with what the going rate is, usually based on a benchmark like the prime rate published by the Wall Street Journal.

What Consumers Should Know About Home Equity Loans and HELOCs

The most important thing to know about home equity loans and HELOCs is that, like a mortgage, they’re secured against your home. That means if you don’t pay the money back, the bank can take your house. That makes it vital to be careful when you borrow. “If it’s not a need and it’s just some sort of desire or want, you should really ask yourself: Is this something that is wise?” Linda Sherry, director of national priorities for Consumer Action, a national advocacy group, told us.

It’s also good to understand that just because the value of your house has increased doesn’t mean it will stay that way forever. While real estate values generally tend to increase over time, they can drop. Your market might also see prices fall while national trends are upward. “I think you have to look at it as if the amount you could sell your house for might go down in the future and you don’t want to borrow too much against it because at closing you’d have to pay back an unusually large sum,” Sherry says. “You might end up underwater in a really bad scenario, where you would owe back more at closing than you actually were able to sell the house for.”

If you’re aware of the risks and know you can pay the money back, home equity loans and HELOCs can provide lower interest rates than other types of borrowing. Experts say it’s wise to be careful with any kind of borrowing, and do it only in situations where you’re confident you’ll have the cash in the future to repay.

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