How to compare HELOC and home equity loan rates now
When borrowing money, the interest rate on the product in question is always a top concern. Unfortunately, in the economic climate of the last few years, rates haven't been particularly advantageous. Whether you were looking for a mortgage, personal loan or just needed a new credit card, the interest rate you were offered was likely much higher than it would've been if you had applied earlier in the decade. While rates on home equity borrowing products weren't immune from this trend, thanks to the home in question functioning as collateral, lenders typically offered lower rates on home equity loans and home equity lines of credit (HELOCs).
And that's been particularly pronounced in early 2025, as rates on both products continued the downward trend they started in 2024. Before getting started with either product, however, interest borrowers should know what to look for – and how to compare – their HELOC and home equity loan rate offers now to find the most cost-effective and secure option. Below, we'll break down what to consider now.
Start by seeing what home equity loan rate you'd qualify for here.
How to compare HELOC and home equity loan rates now
Here are three ways in which homeowners should compare HELOC and home equity loan rates in today's economy:
Understand the rate structure
Right now, rates on home equity loans and HELOCs are both competitive, with the former sitting around 8.37% and the latter at 8.03% (for qualified borrowers). But only one of those will be poised to exploit interest rate cuts to come. That's because a HELOC has a variable rate that has declined for existing borrowers multiple times already this year and could continue to fall further should additional interest rate cuts materialize.
Home equity loan rates, meantime, are fixed and will need to be refinanced (and closing costs will need to be paid) for borrowers to take advantage of that new lower rate. Understanding the structure of both products, then, can help interested borrowers understand why HELOC rates are lower than home equity loans now. But it can also help borrowers better determine which is the more appropriate option for their current financial circumstances.
See how low of a HELOC rate you'd be eligible for here.
Look at the recent trends
Home equity loan and HELOC interest rates have both declined over the past year, approximately, but the trends aren't identical. Home equity loan rates aren't even down a full point as they were 9.08% in January 2024 and are 8.37% now. HELOC rates, however, have already hit 18-month and two-year lows in 2025 and are around two points lower than the approximate 10% they were in early 2024. So if you're singularly focused on securing the lowest rate available now (but still want to be positioned to take advantage of additional declines ahead), a HELOC may be the better option.
Be realistic about the future
As tempting as it may be to automatically pursue the lowest interest rate now, home equity borrowers should be especially realistic about the future of the rate climate. HELOC rates can rise as easily as they can fall and any number of economic impacts can change that downward trajectory.
Home equity loans, while slightly more expensive now, could become the less expensive option in the future should HELOC rates be impacted by negative economic news (although home equity loan rates could be driven by those developments, too). So be realistic about where rates on either could be headed. It may not be worth the short-term savings a HELOC can provide now if those rates reverse course later this year or in 2026 (they change monthly for borrowers).
The bottom line
Interest rates on HELOCs and home equity loans are low now and could become even lower in the near future, giving homeowners in need of extra financing something to contemplate. By understanding the rate structure of each, however, and by reviewing recent trends and being realistic about where those trends are headed long-term, homeowners can better choose a home equity borrowing option that is affordable for their budget now and will remain so long into the typical 10- or 15-year repayment period.
