What's a good home equity loan interest rate now that the Fed's cutting rates again?
It's rare to have a robust borrowing source and a low interest rate to utilize at the same time.
But that's exactly what home equity borrowers have been accustomed to in recent years. Home equity levels reached a record high heading into the third quarter of 2025, according to a recent report. Currently, the average homeowner has around $300,000 worth of equity to borrow from.
At the same time, home equity loan rates are cheaper than what can typically be secured with a credit card or personal loan. And they're positioned to become even more affordable now that the Federal Reserve has resumed the interest-rate cut campaign it started in 2024. With one Fed rate cut already issued in September and others widely anticipated for when the Fed meets again in October and December, a home equity loan could soon become even more affordable than it already is.
With your home serving as collateral in these exchanges, however, and the inherent risk of foreclosure if you're unable to make repayments, it's important to calculate your costs in advance. And that starts with knowing what a "good" home equity loan rate is considered to be now, after the Fed cut rates again. Below, we'll detail what prospective home equity borrowers need to know.
Start by seeing how much home equity you'd be eligible to borrow here.
What's a good home equity loan interest rate now that the Fed's cutting rates again?
Average home equity loan rates vary depending on the repayment period. Here's what they look like now, according to Bankrate:
- 5-year home equity loans: 8.21%
- 10-year home equity loans: 8.36%
- 15-year home equity loans: 8.24%
So, if you can find a home equity loan with a rate near these, then you can consider it to be a "good" one. But if you have a good credit score, clean credit history and substantial amounts of equity to borrow from, you may be able to find an even better, lower rate.
Consider shopping around and evaluating offers from online banks and local ones to find the lowest rate for your needs. And remember that you don't need to automatically use your current mortgage lender, so take the time to compare offers. You can always return to your original lender to see if they can beat the best offer you've found.
Shop for home equity loan rates online now.
Is a HELOC better than a home equity loan now?
Home equity lines of credit (HELOCs) offer homeowners interested in borrowing equity an affordable alternative to home equity loans. Average HELOC rates are comfortably under 8% now, providing significant savings opportunities compared to the 8.20% range home equity loan rates currently fall in. And, thanks to its variable rate that's responsive to market conditions, a HELOC could soon become even more affordable once new rate cuts are issued.
At the same time, a variable rate can inherently be risky for borrowers, particularly those who are leveraging their home equity. Rates here can rise as easily as they can decline, so that volatility will need to be budgeted for before securing the line of credit. If you can afford moderate monthly rate changes, however, this could be the cost-effective home equity borrowing alternative worth considering now.
The bottom line
A "good" home equity loan rate this month, after the Fed cut rates, is considered to be 8.36% or lower, depending on the length of the repayment period. Just remember that the rate you lock in now will be the one you keep until you repay the loan in full or unless you refinance. Take the time, then, to shop around to find the lowest rate you can. Refinancing, after all, comes with its own costs that will need to be accounted for, too, but if you find a good rate now you may be able to avoid that scenario entirely.