Home equity loan rates hit 2025 low: Why you should take advantage now

Home equity loan interest rates, already on a slow but consistent decline for much of the last 18 months, fell to a new 2025 low this week. Now at an average of just 8.23%, home equity loan rates are falling again, according to Bankrate data. The recent decline marked a 13 basis point drop from May 14, and it continued the trend of home equity loan rates declining after they started 2024 close to 9%. 

This new decline, however, is a particularly important one as it comes amid a pause in the federal funds rate, which hasn't been reduced since December 2024. And it emphasizes the cost-effectiveness of this borrowing tool right now, as rates here are materially lower than those available with personal loans (over 12%) and credit cards (over 22%).

As borrowers have experienced in recent years, however, the interest rate climate can be volatile. So with home equity loan rates hitting a new 2025 low, it could make sense to take advantage of this timely opportunity while readily available. Below, we'll detail three reasons why it makes sense to take action now.

Start by seeing how low a home equity loan rate you'd be eligible for here.

Why you should take advantage of a low home equity loan rate now

Here are three timely reasons why you should consider locking a home equity loan rate now:

Home equity loan rates are fixed

As noted above, it's been a bumpy ride down to this low of a home equity loan rate, and there's no telling when rates will go lower, or even if they will. Fortunately, a home equity loan comes with a fixed rate that will remain the same for borrowers even if the interest rate climate reverses course in the weeks or months ahead. 

Considering that rates here are lower than most alternatives, then, it makes sense to secure this affordability while you can. And, if rates decline in a significant way in the future, you could always refinance your home equity loan at that point. In the interim, however, you'll be protected against any future rate hikes ahead.

Get started with a home equity loan online today.

HELOC rates have been increasing

For much of 2025, a home equity line of credit (HELOC) was the more affordable option when measured against a home equity loan. While home equity loan rates remained relatively unchanged, HELOC rates continued to fall and, at one point, were more than two full percentage points below their September 2024 average. 

But that window of opportunity has since passed. HELOC rates have been steadily climbing in recent weeks and are now virtually the same as a home equity loan at an average of 8.20%. Unlike home equity loans, however, HELOCs have variable rates that adjust monthly, meaning that they could rise even higher should trends continue as they have so far in May. In this climate, then, a home equity loan may be the better option.

Your financing needs may not be able to wait

Waiting for an ideal interest rate scenario isn't realistic for many homeowners right now, and it's arguably not necessary when home equity loan rates are as low as they are currently. Your financing needs, meantime, may not be able to wait for the interest rate climate to cool any further, particularly if you're planning to use your home equity to consolidate high-rate debt, like that accumulated with credit cards, for example. Considering that credit card rates are almost three times higher than home equity loan rates, it makes sense to use the latter to pay off the former now – and not delay and damage your financial standing any further.

The bottom line

With home equity loan interest rates at a new low for 2025, homeowners in need of additional financing may want to take advantage of this opportunity now. Considering that this low rate will be fixed, that alternatives like HELOCs are actually becoming more expensive and the urgent financing needs that a home equity loan can help cover, many would benefit by shopping around for lenders and rates now. Just be sure to calculate your repayment costs with precision as your home functions as collateral in this scenario and it could be foreclosed on if you're ultimately unable to repay all that was withdrawn.

Learn more about your current home equity loan options here.