Home equity line of credit rates are easing into the final days of 2025, offering homeowners a potentially attractive way to unlock record levels of accumulated housing wealth without refinancing their primary mortgage. Average HELOC rates are now hovering near the 7% threshold, reflecting softer benchmark rates and competitive lender pricing as financial institutions position for early-2026 demand. The shift comes at a time when homeowners are sitting on unprecedented equity but remain reluctant to part with historically low mortgage rates.

HELOC Rates Edge Lower as Market Conditions Stabilize

According to data from Curinos, the average national HELOC rate in December stands at approximately 7.44% for well-qualified borrowers, defined as those with credit scores of 780 or higher and combined loan-to-value ratios below 70%. Large national lenders such as Bank of America are advertising rates starting around 7.3%, although regional pricing differences remain significant, with some borrowers facing rates closer to 8.8% depending on location and risk profile.

This gradual decline reflects broader stabilization in interest-rate expectations as inflation pressures ease and markets look ahead to potential policy adjustments in 2026. While HELOC rates remain higher than the ultra-low borrowing costs seen earlier in the decade, they are becoming increasingly compelling relative to cash-out refinancing, particularly for homeowners locked into mortgages at 3% to 5%.

Record Home Equity Fuels Demand for Flexible Credit

U.S. homeowners collectively held nearly $36 trillion in home equity as of mid-2024, the highest level on record. With mortgage rates still near 6%, selling or refinancing often carries a steep opportunity cost. In this environment, HELOCs offer a flexible alternative, allowing borrowers to tap equity incrementally rather than all at once.

Unlike traditional home equity loans, HELOCs function as revolving credit lines. Borrowers draw funds as needed, repay balances, and re-borrow during the draw period, paying interest only on the amount used. This structure appeals to homeowners funding renovations, consolidating higher-interest debt, or maintaining liquidity for future needs without permanently increasing leverage.

How Pricing Works — and Why Shopping Matters

HELOC interest rates are typically structured as a benchmark index, most commonly the prime rate, plus a lender-specific margin. With the prime rate currently around 6.75%, a modest margin can place borrowing costs near today’s prevailing levels. However, lender discretion plays a significant role, making rate shopping essential.

Many advertised averages also include short-term introductory offers. Some lenders are promoting teaser rates below 6% for six to twelve months before reverting to fully variable pricing. While these offers can materially reduce short-term costs, borrowers must factor in the likelihood of higher payments later, particularly if rates remain elevated or increase.

Strategic Considerations Into 2026

From a financial planning perspective, HELOCs are most effective when used deliberately and repaid within a shorter horizon. Variable-rate exposure introduces uncertainty, especially if rate cuts are delayed or inflation reaccelerates. At the same time, declining rates may present refinancing opportunities within the HELOC itself if fixed-rate conversion options are available.

As year-end approaches, lenders are competing for high-quality borrowers, and pricing flexibility is improving. Homeowners with strong credit profiles and substantial equity may find this period particularly favorable to establish a line of credit, even if they do not immediately draw funds.