HELOC Rates Just Fell Again — Here's Who Should Grab One Now

Borrowers hunting for cash just caught a break. Average home equity line of credit rates slipped to 7.49% this week, down from 8.02% a month ago, according to Bankrate's latest survey. That's the lowest reading since early 2023, and it changes the math on a decision millions of homeowners are quietly weighing. Here's why it matters: roughly $35 trillion in home equity is sitting untapped across the country, per ICE Mortgage Technology. Most of it belongs to people locked into 3% mortgages who refuse to sell — and who are increasingly turning to HELOCs instead of cash-out refinances. Why HELOCs are winning right now A cash-out refinance replaces your entire mortgage at today's rates, which hover near 7%. If you're sitting on a 3.5% loan, that's a terrible trade. A HELOC only touches your equity, leaving your first mortgage untouched. The catch has always been that HELOCs are variable-rate, tied to the prime rate, which tracks the Fed. The Fed has held steady for months, and lenders — hungry for new business as refinance volume dries up — are trimming margins to compete. That's why you're seeing advertised rates below 7% at some credit unions and regional banks, even as the national average sits near 7.5%. What you'll actually pay Advertised teaser rates are the classic bait-and-switch. Many HELOCs come with introductory rates as low as 5.99% for six to twelve months, then jump to prime plus a margin. Prime is currently 7.5%, so a "prime plus 0.5%" loan resets to 8% once the promo ends. Do the math on the full reset rate before signing. A HELOC on a $50,000 balance at 8% costs about $333 a month interest-only. At 12% — the ceiling some contracts allow — that's $500. Ask specifically what your lifetime cap is. Three questions to ask before you apply First, is there an annual fee? Plenty of lenders waive closing costs, then charge a $50 to $100 annual maintenance fee. Second, what's the draw period? Most run ten years of interest-only payments, then twenty years of repayment — your payment can triple overnight when that switch flips. Third, does the lender freeze lines? Several big banks froze HELOCs during the 2008 crash and again in 2020. It's legal, and it's in your contract. Who should move now If you need cash for a renovation, debt consolidation, or a down payment on a second property, this window is worth a hard look. Rates could drift lower if the Fed cuts later this year, but lenders are already pricing in some of that. Waiting rarely pays off when you're competing for a promotional rate that caps out. Skip it if you're borrowing for something discretionary, or if you can't comfortably handle a payment that rises 50% in a bad rate environment. A HELOC is secured by your house. That's the part people forget when the teaser rate looks pretty. Our take HELOC rates at 7.49% are genuinely better than they've been in two years, and for homeowners with low first-mortgage rates, a line of credit beats a cash-out refi in almost every scenario. But the advertised number is never the real number. Get the reset rate, the cap, and the fees in writing — then decide if the payment still works when the music stops.