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How low will home equity loan interest rates drop in November?
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High inflation and the elevated interest rates meant to tame it have dogged borrowers over the past few years. Even with high borrowing costs keeping many people from adding new debt, home equity borrowing has remained an option for those looking to tap into their home’s value. Since these home equity loans and home equity lines of credit (HELOCs) are backed by your home, they typically come with lower interest rates than credit cards and other types of loans.
Fortunately, the lending environment is changing for the better. Inflation is falling, and the Federal Reserve cut interest rates by 0.50% in September. With the Fed meeting this week and again in December, some economists anticipate further interest rate reductions, which could make borrowing more affordable.
While recent developments look promising, nothing is certain. Interest rates across various loan types, including mortgages, edged higher in October. As of November 7, 2024, the national average interest rates for home equity loans and HELOCs are 8.41% and 8.70%, respectively. But could events in November push home equity loan rates lower, and if so, by how much? Let’s break down what could happen and how it might affect you.
Find out what the top home equity borrowing rates are today.
A small home equity loan rate drop is possible in November
If the Fed lowers the federal funds rate as some anticipate, a corresponding drop in mortgage rates — including home equity loan and HELOC rates—could be possible. The CME Group’s FedWatch Tool indicates a 98% chance the bank will cut the rate at its November meeting. If that occurs, both new and existing HELOC rates might decrease, as they are variable and adjust on a monthly basis.
By contrast, home equity loan rates may not see an immediate impact from a Fed rate cut, as they are typically fixed and don’t adjust monthly like HELOC rates.
“If the Fed drops its rate by a quarter point, then you may see HELOC rates drop by a quarter,” says Mason Whitehead, branch manager at Churchill Mortgage. “I don’t think anyone is expecting another 50-basis-point rate cut, and there is some talk about not seeing a cut at all.”
Jeremy Schachter, branch manager at Fairway Independent Mortgage Corporation, shares a similar outlook but points to December as a possible turning point.
“I don’t anticipate the Federal Reserve to drop rates in their next meeting for November 6-7. However, they will meet one last time for 2024 in mid-December. Depending on what economic news comes out, the Feds may reduce rates then,” Schachter says.
Compare today’s best home equity borrowing options now.
Home equity loan rates likely to remain steady in November
If you’re thinking about tapping into your home equity for cash, you might find slightly lower rates in November. Just remember that some experts expect rates to stay the same or only dip a bit in the short term.
“I expect home equity lending rates to remain the same in November,” says Schachter. “The Federal Reserve did a major decrease of 0.50% in September. Since then other economic data has come out indicating that the job market is still very strong.”
Schachter believes the direction of mortgage rates, including home equity lending options, may depend in part on the upcoming November jobs report by the U.S. Bureau of Labor Statistics.
“If the economy is still hot, I don’t expect the Federal Reserve to drop rates in November,” Schachter says.
Whitehead is seeing increased interest in HELOCs and anticipates rates staying the same or dropping slightly.
“HELOC rates are typically tied to prime, so they are impacted when the Fed lowers or raises the federal funds rate. I believe these rates will remain flat, but if the Fed lowers the rate in November, you may see a small drop in HELOC rates—not much to get excited about, but every little bit helps,” Whitehead says.
The bottom line
While a 0.25% rate drop in November could help you save money, remember — it’s not guaranteed. And depending on the amount you borrow, the potential savings may not be substantial. With no way to predict with 100% certainty if rates will go up, down, or stay steady, focus on what you can control. If you’re comfortable with the payments and the loan fits your financial goals, moving forward could make sense.
“A home equity loan doesn’t need to be a quick decision, but rather one that fits into your long-term financial goals,” says Alex Beene, a financial literacy instructor for the University of Tennessee at Martin. “If you’re using it sparingly and to add value to your life either for an investment in yourself or something you plan to sell in the short or long term, then it can be a savvy decision. If you don’t have that plan outlined, it’s a risk you shouldn’t take.”
Fortunately, interest rates may be trending down—a welcome sign for borrowers waiting on the sidelines until now. Comments from the Federal Reserve’s September meeting suggest further rate cuts could be on the way this year and into 2025, making home equity borrowing options potentially more affordable soon.
Canada announced Wednesday it won’t block access to the popular video-sharing app TikTok but is ordering the dissolution of its Canadian business after a national security review of the Chinese company behind it.
Industry Minister François-Philippe Champagne said it is meant to address risks related to ByteDance Ltd.’s establishment of TikTok Technology Canada Inc.
“The government is not blocking Canadians’ access to the TikTok application or their ability to create content. The decision to use a social media application or platform is a personal choice,” Champagne said.
Champagne said it is important for Canadians to adopt good cybersecurity practices, including protecting their personal information.
He said the dissolution order was made in accordance with the Investment Canada Act, which allows for the review of foreign investments that may harm Canada’s national security. He said the decision was based on information and evidence collected over the course of the review and on the advice of Canada’s security and intelligence community and other government partners.
A TikTok spokesperson said in a statement that the shutdown of its Canadian offices will mean the loss of hundreds of local jobs.
“We will challenge this order in court,” the spokesperson said. “The TikTok platform will remain available for creators to find an audience, explore new interests and for businesses to thrive.”
TikTok is wildly popular with young people, but its Chinese ownership has raised fears that Beijing could use it to collect data on Western users or push pro-China narratives and misinformation. TikTok is owned by ByteDance, a Chinese company that moved its headquarters to Singapore in 2020.
TikTok faces intensifying scrutiny from Europe and America over security and data privacy. It comes as China and the West are locked in a wider tug of war over technology ranging from spy balloons to computer chips.
Canada previously banned TikTok from all government-issued mobile devices. TikTok has two offices in Canada, one in Toronto and one in Vancouver.
Michael Geist, Canada research chair in internet and e-commerce law at the University of Ottawa, said in a blog post that “banning the company rather than the app may actually make matters worse since the risks associated with the app will remain but the ability to hold the company accountable will be weakened.”
Canada’s move comes a day after the election in the United States of Donald Trump. In June, Trump joined TikTok, a platform he once tried to ban while in the White House. It has about 170 million users in the U.S.
Trump tried to ban TikTok through an executive order that said “the spread in the United States of mobile applications developed and owned” by Chinese companies was a national security threat. The courts blocked the action after TikTok sued.
Both the U.S. FBI and the Federal Communications Commission have warned that ByteDance could share user data such as browsing history, location and biometric identifiers with China’s government. TikTok said it has never done that and would not, if asked.
Trump said earlier this year that he still believes TikTok posed a national security risk, but was opposed to banning it.
U.S. President Joe Biden signed legislation in April that would force ByteDance to sell the app to a U.S. company within a year or face a national ban. It’s not clear whether that law will survive a legal challenge filed by TikTok or that ByteDance would agree to sell.
The Trump administration could be a boon for business for private prison companies in the U.S. if the president-elect delivers on his promise to crack down on illegal immigration.
CoreCivic and Geo Group, the two biggest private prison operators in the U.S., both contract with the U.S. Immigration and Customs Enforcement (ICE) to house detained, undocumented migrants. Their stocks soared Wednesday following Trump’s election win, with investors betting the companies will see increased profits from a tough-on-immigration administration.
CoreCivic, which closed at $13.50 a share on November 5, is trading at $22 a share, while Geo Group, which closed at $15 a share Tuesday, is currently trading at $23.75.
“Obviously, investors believe there is going to be a significant increase in opportunity for both of these firms under the Trump administration,” Noble Capital Markets analyst Joe Gomes told CBS MoneyWatch.
Geo Group executives acknowledged on the company’s third-quarter earnings call Thursday that it expects the incoming administration to enact stricter border security policies and that the company stands “ready to provide additional resources to help ICE meet future needs.”
CoreCivic executives also said they believe the election result will drive demand for its services.
ICE is biggest customer
During Trump’s first term in office, from 2017-2021, immigration detention expanded at record levels, according to an ACLU report. In 2019, ICE detained an average of over 50,000 people each day. At times, that number exceeded 56,000 — about 50% more than peak levels during the Obama administration, according to the report. During his first term in office, Trump expanded the federal government’s use of private prison companies to detain immigrants.
As of January 2020, 81% of people detained in ICE custody across the U.S. were held in facilities owned or managed by private prison corporations, according to the ACLU report.
In his second term, President-elect Trump promises a radical shift in policy at the U.S.-Mexico border from his predecessor. That includes a pledge to oversee the largest deportation operation in American history, which could bring significantly more business to CoreCivic and Geo Group.
For the first nine months of 2024, ICE accounted for 30% of each company’s revenue.
Both Geo Group and CoreCivic said they currently have excess capacity to accommodate a larger population of detainees. CoreCivic executives noted that they’re taking steps to prepare to activate additional capacity to meet ICE’s needs. That could include reconfiguring facilities to accommodate a bigger intake area, they noted.
“There is room for an uptick in occupancy from a capacity standpoint and both companies expect an ask from the Trump administration for more beds. The question is how much, and we just don’t know right now,” Wedbush Securities analyst Brian Violino told CBS MoneyWatch.
Monitoring
Geo Group also provides monitoring services for ICE under its Intensive Supervision Appearance Program (ISAP), a monitoring program using wearable technology that serves as an alternative to detention.
“If there is a finite number of beds and a significant number of people are detained, which Trump is discussing in his plans, there could be an increased usage in this alternative to detention,” Violino said.
Geo Group executives said they have the necessary technology and staffing resources to scale up the contract to more than several million participants, if necessary.
Funding from Congress
The degree to which ICE expands its contracts with the two largest private prison companies depends on how big of an increase in funding Congress authorizes. While Republicans won the Senate majority in Tuesday’s election, it remains to be seen which party will obtain control of the U.S. House of Representatives.
“That’s a big part of the story, and if it’s a Republican sweep, it will be easier for Trump to get funding from Congress to support this operation he’s looking to do,” Violino said.
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