HELOC and home equity loan rates on January 23, 2026: Remaining near their lowest levels in years

Current Trends in Second Mortgage and Home Equity Rates

Interest rates for second mortgages, including home equity loans and lines of credit, remain near their lowest levels in years. The prime rate, which serves as a reference point for home equity lending, is unlikely to decrease soon as the Federal Reserve considers its next move on interest rates.

• Learn how interest rates for HELOCs and home equity loans are set and what you might expect to pay.

HELOC and Home Equity Loan Rates as of Friday, January 23, 2026

Recent data from Curinos shows that the average rate for a HELOC is 7.25%, a decrease of 19 basis points compared to last month. Meanwhile, the typical rate for a home equity loan stands at 7.56%, down three basis points over the same period.

These averages are based on borrowers with a credit score of at least 780 and a combined loan-to-value ratio (CLTV) below 70%.

According to the Federal Reserve, homeowners collectively held nearly $34 trillion in home equity by the end of the third quarter of 2025.

With mortgage rates lingering in the low 6% range, many homeowners are reluctant to refinance or sell, especially if they currently have mortgages at 5%, 4%, or even 3%. As a result, options like cash-out refinancing may not be appealing.

Instead, tapping into home equity through a HELOC or a lump-sum home equity loan can provide flexible access to funds without sacrificing a favorable primary mortgage rate.

• MORE: See our recommendations for top HELOC lenders.

How HELOC and Home Equity Loan Rates Are Set

Unlike traditional mortgages, home equity loan rates are determined by adding a margin to an index rate, often the prime rate. For example, with the prime rate at 6.75% after the Federal Reserve’s last rate cut on December 10, a lender might add a 0.75% margin, resulting in a variable HELOC rate of 7.50%.

Home equity loans, which have fixed interest rates, may use a different margin.

Lenders have considerable discretion in setting rates for second mortgages like HELOCs and home equity loans. Your rate will be influenced by your credit score, existing debt, and the ratio of your credit line to your home’s value. Comparing offers from several lenders can help you secure the most competitive rate.

• Discover how fixed-rate HELOCs function.

Home Equity Lenders Respond to Lower Prime Rate

Following three Federal Reserve rate cuts in 2025, the prime rate has dropped to 6.75%. This has prompted home equity lenders to adjust their rates accordingly.

For instance, FourLeaf Credit Union is currently advertising a HELOC with a 5.99% APR for the first 12 months on lines up to $500,000. After the introductory period, the rate will switch to a variable rate.

This example illustrates that lenders are reducing both their adjustable and introductory rates in response to the Fed’s rate policy.

When evaluating lenders, pay attention to both the introductory and ongoing rates, as well as fees, repayment terms, and the minimum initial draw amount required. The draw amount is the minimum sum you must borrow from your equity at the outset.

Finding the best home equity loan lenders may be easier since the fixed rate remains constant throughout the repayment period, and you receive a lump sum with no minimum draw requirements.

Frequently Asked Questions About HELOC and Home Equity Loan Rates

What is a competitive HELOC rate right now?

HELOC rates can range widely, from as low as 6% to as high as 18%, depending on your credit profile and how thoroughly you shop around. Currently, the national average stands at 7.25% for HELOCs and 7.56% for home equity loans.

Is now a smart time to get a HELOC or home equity loan?

With interest rates having declined throughout 2025 and likely to continue dropping, this is a favorable period to consider a second mortgage. A HELOC or home equity loan allows you to use your home’s equity for renovations, repairs, upgrades, or other financial needs.

What would the monthly payment be on a $50,000 HELOC?

If you borrow the full $50,000 at a 7.50% interest rate, your monthly payment during the 10-year draw period would be about $313. Keep in mind, however, that HELOC rates are typically variable, so your payments may rise during the 20-year repayment phase. In total, a HELOC can function much like a 30-year loan, but it’s most cost-effective if you repay the balance sooner.