CBS News
Will my home equity loan rate drop after rates are cut?
Getty Images
Borrowing from your home equity has been one of the most cost-effective ways to access extra cash in recent years. While credit card interest rates surged past 20% and personal loans rose to around 12% (on average), both home equity loan and home equity line of credit (HELOC) interest rates mostly remained in the single digits. And with home values seemingly on a continuous rise, the average homeowner has around $327,000 worth of equity right now.
A lower interest rate and higher amounts of borrowing potential aren’t the only benefits of a home equity loan now, however. With inflation dramatically cooling and interest rate cuts imminent when the Federal Reserve meets again later this September, home equity could become even more affordable than it already is. But if you already have a home equity loan will the rate just drop automatically — or will you need to take action to secure the lower rate? That’s what we’ll detail below.
See how low today’s home equity loan rates are here now.
Will my home equity loan rate drop after rates are cut?
In short: No, your home equity loan interest rate won’t automatically drop after interest rates are cut. That’s because home equity loans have fixed interest rates which remain the same for the life of the loan. That’s actually been a big selling point for this financial product in the increasing rate climate of recent years. As rates rose repeatedly in 2022 and 2023, home equity loans remained the same for borrowers. This allowed them to budget accurately and it allowed them to remain immune from an otherwise adverse rate climate.
But with rates now on a downward trend and multiple cuts to the federal funds rate on tap for this year, home equity loan borrowers may be looking to reduce their payments via a lower rate. Fortunately, there are two ways they can do so:
- Refinance to a lower rate: If you like the structure and predictability of the fixed-rate home equity loan and simply want to pay less, then consider a traditional refinance from your current home equity loan rate to the prevailing, presumably lower one. You will need to pay home equity loan refinancing costs to secure a better rate (approximately 1% to 5% of the loan’s value), but it could be worth it if it results in a significant reduction in your payments. Just be careful not to be too hasty. With multiple rate cuts on the horizon, you’ll need to carefully consider the benefits of refinancing now versus what could be available soon.
- Refinance into a HELOC: Depending on the lender, you may also be able to refinance into a HELOC instead. HELOC interest rates are variable and subject to change as the rate climate does. So once refinanced into this product type, you won’t need to worry about taking advantage of future rate cuts — your HELOC will adjust on its own (often monthly). Still, HELOC rates are averaging almost a full point higher than home equity loans right now (9.25% versus 8.49%). So you’ll need to weigh that higher rate versus the HELOC’s innate ability to adjust as rates improve.
Compare the best HELOC and home equity loan offers online.
The bottom line
Home equity loans have fixed rates, making them safe and reliable when interest rates are climbing but less beneficial when rates are falling again. But homeowners have options. They can keep the structure of their home equity loan and refinance to a new lower rate (for a price) or they can refinance into a HELOC, which has variable rates that will automatically decline as the overall rate environment does. Just don’t sit idle. With lower interest rates soon available, home equity borrowers could see significant savings if they take certain steps now.
U.S. and European law enforcement agencies are working together to investigate whether incendiary devices detonated in July at DHL logistics hubs in Germany and the U.K. were part of a larger operation directed by Russian Intelligence services (in particular, the GRU — Russian military intelligence), the highest level of the Russian government or by outside individuals acting in the interests of Russia, a source familiar with the matter said.
Officials are working to determine whether the larger operation was to place similar devices on aircraft servicing the U.S. and U.S. allies. The Wall Street Journal first reported the alleged plot targeting U.S. aircraft.
The 2025 Homeland Threat Assessment published at the end of October said the U.S. continues to be concerned about threats to the aviation and air cargo systems, including the “potential use of the air cargo supply chain to ship concealed dangerous and potentially deadly items.”
DHL said in a statement that it was aware “of two recent incidents involving shipments in our network. We are fully cooperating with the relevant authorities to protect our people, our network and our customers’ shipments.”
“We continually adjust our security posture as appropriate and promptly share any and all relevant information with our industry partners, to include requirements and recommendations that help them reduce risk,” the Transportation Security Administration said in a statement.
“Over the past several months, as part of a multi-layered security approach, TSA worked with industry partners to put additional security measures for U.S. aircraft operators and foreign air carriers regarding certain cargo shipments bound for the United States, in line with the 2021 TSA Air Cargo Security Roadmap,” the TSA’s statement continued.
The FBI declined to comment.
contributed to this report.
Boeing’s 33,000 unionized machinists on Wednesday voted to approve the plane manufacturer’s latest contract offer, ending a seven-week strike that had halted production of most of the company’s passenger planes.
The union said 59% voted to accept the contract. Members have the option of returning to work as soon as Wednesday, but must be back at work by Tuesday, November 12, the union said in a statement.
Union leaders had strongly urged members to ratify the latest proposal, which would boost wages by 38% over the four-year life of the contract, up from a proposed increase of 35% that members of the International Association of Machinists and Aerospace Workers (IAM) had rejected last month.
The revised deal also provides a $12,000 cash bonus to hourly workers and increased contributions to retirement savings plans. The enhanced offer doesn’t address a key sticking point in the contentious talks — restoration of pensions — but Boeing would raise its contributions to employee 401K plans.
Average annual pay for machinists, now $75,608, would climb to $119,309 in four years under the current offer, Boeing said.
The vote came after IAM members in September and October rejected lesser offers by the Seattle-based aerospace giant.
“In every negotiation and strike, there is a point where we have extracted everything we can in bargaining and by withholding our labor,” the International Association of Machinists and Aerospace Workers stated last week in backing Boeing’s revised offer. “We are at that point now and risk a regressive or lesser offer in the future.”
Acting U.S. Labor Secretary Julie Su has played an active role in the negotiations, after recently helping to end a days-long walkout that briefly closed East and Gulf Coast ports.
The Boeing strike that began on Sept. 13 marked the latest setback for the manufacturing giant, which has been the focus of multiple federal probes after a door plug blew off a 737 Max plane during an Alaska Airlines flight in January. The incident revived concerns about the safety of the aircraft after two crashed within five months in 2018 and 2019, killing 346 people.
Boeing in July agreed to plead guilty to conspiracy to commit fraud for deceiving regulators who approved the 737 Max.
During the strike, Boeing was unable to produce any new 737 aircraft, which are made at the company’s assembly plants in the Seattle area. One major Boeing jet, the 787 Dreamliner, is manufactured at a nonunion factory in South Carolina.
The company last month reported a third-quarter loss of $6.1 billion.
contributed to this report.
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.