U.S. HOUSING MARKET — Home equity line of credit borrowing costs have fallen from roughly 10% two years ago to around 7% at the end of 2025. The monthly cost to tap $50,000 in equity has fallen from $412 to $296, a roughly 30% reduction.

Two additional Federal Reserve rate cuts projected for 2026 could reduce the monthly cost by roughly 10%. HELOC rates have a variable interest rate that changes monthly based on market conditions.

HELOC borrowers do not need to refinance or pay closing costs to benefit from rate reductions. Borrowers with home equity loans generally must refinance and pay closing costs to benefit from rate changes.

A home equity line of credit uses the borrower's home as collateral. Failure to repay amounts borrowed through a home equity line of credit can result in foreclosure.

Homeowners have nearly $17 trillion in total home equity currently. Around $11 trillion of home equity is considered tappable by homeowners right now.

A HELOC used for home repairs and renovations may come with tax benefits. Borrowers are not required to use their current mortgage lender to obtain a home equity line of credit.

HELOC borrowing costs have dropped over the past two years. This decline reflects broader changes in interest rate conditions affecting variable-rate lending products tied to market benchmarks.