NATIONAL — Home equity loan and Home Equity Line of Credit (HELOC) rates are expected to remain steady or rise in the near term due to persistent inflation and Federal Reserve policy, according to lending and economic experts in early 2026. Rates for these loan types had decreased over the past year before recently rising.

The Federal Reserve has maintained its federal funds rate without changes since late 2025. The current inflation rate in the U.S. is 4.2%, which is the highest level recorded in over three years. HELOC interest rates are tied to the prime rate. Lenders offer HELOCs at the prime rate plus a specific margin.

Jeff DerGurahian, chief investment officer and head economist at loanDepot, said, "I wouldn't count on a meaningful drop in the near term." He said, "HELOC rates are likely to stay fairly steady unless the Fed makes a move, but the risk is tilted more toward them rising than falling." He added, "That said, it's unlikely that new Fed Chair Kevin Warsh would move to hike rates so soon after stepping into the role."

Adam Slack, senior vice president of mortgage lending at CrossCountry Mortgage, said, "Rates could increase if inflation proves more persistent or if there's a prolonged conflict." Slack said, "Factors such as rising oil and gas prices or supply chain disruptions can contribute to inflation, which may influence the Federal Reserve policy and mortgage rate trends."

Kenisha Forbes, director of loan processing for Georgia's Own Credit Union, said, "In terms of where home equity rates are headed, the next couple of months could be tricky." Forbes said, "We will need to see a true resolution to the Iran conflict, a decrease in inflation and further contraction in the job market." Lynette Arrasmith, a mortgage advisor for Churchill Mortgage, said, "In order for the HELOC rates to go down, the fed rate needs to go down." Forbes said, "The smart play right now is debt consolidation and home improvement." She said, "A 7% interest rate is still substantially lower than a 24% plus credit card rate."