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Home equity loans offer homeowners one of the more affordable ways to borrow a large sum of money right now. And, after last week, this became even clearer as home equity loan interest rates declined to a new 2025 low. At an average rate of just 8.23% currently, home equity loans are less expensive than personal loans and credit cards and are just a few basis points higher than home equity lines of credit (HELOCs). But the latter type has a variable rate that will change over time, while home equity loan rates are fixed, offering borrowers both affordability and predictability in today’s unpredictable economic climate.
But even though home equity loan rates are fixed, prospective borrowers shouldn’t become complacent in their approach, either. With rates low currently, homeowners should instead take an aggressive but strategic approach. Below, we’ll detail three things borrowers should do right now.
Start by seeing how low a home equity loan rate you’d qualify for here.
3 things to do with home equity loan rates low right now
Here are three timely moves homeowners should make now that home equity loan rates are low again:
Shop for rates and lenders
Did you know that you don’t always have to use your current mortgage lender to borrow with a home equity loan? You may be able to secure lower rates and better terms with a competitor lender, but you won’t know for sure until you start shopping around. So consider doing so right away.
While that 8.23% rate is low, it’s just an average, meaning that you could lock in an even lower rate if you have a high credit score and a clean overall credit profile. Consider getting rate quotes from three lenders to see what’s available – and then go back to your current mortgage lender to see if they can beat the lowest of the three. It may take a bit of time and effort, but it will be worth it if it means paying less interest each month (and over the full life of the loan).
Start shopping for low home equity loan rates here.
Lock in a low rate when found
Home equity loan rates are fixed, but they’re not immune to the market conditions that cause rates on borrowing products to rise or fall. In other words, they could rise again, perhaps sooner than anticipated. So, after shopping around and exploring any potential rate offers your existing mortgage lender has, look to lock in the lowest rate available right now. Home equity loan rates change frequently, and today’s competitive offer could be gone tomorrow.
Locking it in when found will negate that concern, however. Additionally, borrowers could always refinance their loans in the future if rates continue to decline in a material fashion. In the interim, they’ll lock in an affordable rate and get to use the funds to cover their immediate financial needs.
Limit the amount being borrowed
It can be (understandably) tempting to overborrow from your home equity when rates are low. But borrowing more than you can easily afford to pay back is always a mistake, especially when the funding source is your home. Failure to repay a home equity loan, after all, could lead to foreclosure on the property. So, avoid the temptation to borrow more to pay for additional, unnecessary expenses and instead stay focused on why you need to withdraw the equity in the first place. Then limit your loan to that precise amount only.
The bottom line
A new drop in home equity loan interest rates offers homeowners an opportunity to borrow some of the average $313,000 home equity amount owners have now at an affordable price. Still, borrowing should always be done strategically and with precision, particularly when using home equity. By making the above three timely moves right now, home equity loan users will both improve their chances of securing an affordable rate and maintain long-term affordability even if rates and the market fluctuate again.
Learn more about borrowing with a home equity loan now here.
