US home equity rates hit yearly lows as $34 trillion in homeowner equity beckons
With HELOC variable rates at 7.21% and fixed home equity loan rates at 7.36%, borrowers with strong credit profiles face a competitive landscape for accessing the Federal Reserve’s estimated $34 trillion in residential equity.
Home equity loan and home equity line of credit (HELOC) rates in the United States have declined to yearly lows as of May 25, 2026. The national average variable rate for HELOCs sits at 7.21%, while the average fixed rate for home equity loans is recorded at 7.36%. These figures, sourced from real estate data analytics company Curinos, apply to applicants with a credit score of at least 780 and a combined loan-to-value (CLTV) ratio below 70%.
The decline in borrowing costs follows a downward trend over the past week, with HELOC rates now just two basis points away from the 2026 low of 7.19% observed in mid-March. This movement correlates with a fall in the prime rate, which often serves as the index for HELOCs, to 6.75%. Industry analysis indicates that second mortgage rates are typically calculated as an index rate plus a margin; for instance, a 6.75% prime rate combined with a 0.75% margin would result in a 7.50% starting variable rate.
Access to the $34 trillion in home equity estimated by the Federal Reserve is becoming more attractive for homeowners wishing to avoid refinancing their primary mortgages. With first-mortgage rates not moving significantly lower, a second mortgage in the form of a HELOC or home equity loan offers a mechanism to access growing home value without surrendering a low primary rate. A HELOC allows borrowers to draw funds from an approved line of credit as needed, whereas a home equity loan provides a lump sum with a fixed repayment schedule.
Processing times for these products vary significantly across the market. According to the Mortgage Bankers Association, the industrywide average number of days to close a home equity loan is 39 days. However, lender efficiency differs; Yahoo Finance rated Better Mortgage as the best home equity loan lender, noting it can close such loans in as little as three days.
Lenders offer varying terms, including introductory rates that may convert to adjustable rates after a set period. FourLeaf Credit Union is currently offering an introductory HELOC rate of 5.99% for 12 months on lines up to $500,000, which will convert to an adjustable rate after the introductory period. Such teaser rates are common with HELOCs but rare with fixed-rate home equity loans, requiring borrowers to scrutinise both the initial offer and the long-term adjustable terms.
