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How far have home equity loan interest rates fallen in 2024?
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If you’re looking for an inexpensive way to access a large, six-figure sum of money, you’d be hard-pressed to find a better option than your home equity. Not only does the average homeowner possess approximately $330,000 worth of equity to utilize right now, but they can do so at an interest rate significantly lower than what can be secured with alternatives like credit cards and personal loans. And with home equity loans, in particular, those interest rates are fixed for the full repayment period, unless refinanced by the borrower.
That said, it’s important to appropriately time your home equity loan application to lock in an attractive interest rate. To do so, borrowers may find it helpful to gauge how far interest rates on this product have fallen, particularly this year as inflation has declined and multiple interest rate cuts have been issued. Below, we’ll show how far home equity loan interest rates have dropped in 2024 for both 10- and 15-year loans and explain why now may be a smart time to act.
See how low of a home equity loan interest rate you could secure here.
How far have home equity loan interest rates fallen in 2024?
Home equity loan interest rates for both loan terms had been hovering at the same level for most of the year but have experienced a substantial drop in recent months. According to historical Bankrate data, a 15-year home equity loan interest rate was 9.08% on January 3, 2024, but it dropped to 8.87% by February 14. 10-year home equity loans, meantime, were averaging 8.73% on March 27.
By May, 15-year home equity loans were averaging under 8.80% and by August they were under 8.70%. 10-year home equity loans hit 8.61% in early September and both broke under 8.50% in early October: 8.47% for 10-year home equity loans and 8.37% for 15-year home equity loans. And they’ve remained in that approximate range since, with 10-year home equity loans averaging 8.52% on November 13 while 15-year home equity loans were at 8.44% on the same date.
So, between January 1 and mid-November, home equity loan interest rates fell by more than half a percentage point. And while that may not seem substantial on paper, that difference can add up to hundreds and possibly thousands of dollars saved over the life of the loan. For many, then, it may be worth taking advantage of this drop in rates now while lenders are still offering better deals.
Get started with a home equity loan online now.
Is it worth opening a home equity loan now?
The decision to open a home equity loan is a personal one, particularly when considering that the home functions as collateral in this exchange. That said, there’s a compelling argument to be made for opening a home equity loan, specifically, right now. Rates on the product are lower than they’ve been all year long. But with inflation rising in October, it’s possible that they won’t drop much lower, at least for the foreseeable future.
Plus, by acting now — and by using a home equity loan for IRS-eligible home projects — you may be eligible to deduct the interest paid on the loan when you file your 2024 tax return in the spring. If you delay acting, that deduction will need to wait until you file again in 2026. And, if rates somehow fall much further than they already are, you could always refinance then — but still get the financing you need right now.
The bottom line
Home equity loan interest rates have been on the decline for most of 2024, making the final weeks of the year a smart time to act for many homeowners. And with the potential for rates to stay static versus continually moving downward significantly, many homeowners would benefit from acting now, particularly if their financial needs cannot be delayed. Still, it’s critical to approach this borrowing option with care as you could lose your home if you fail to repay all that you’ve withdrawn.
Learn more about your home equity borrowing options here.
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Home equity borrowing is becoming cheaper again. Interest rates on home equity lines of credit (HELOCs) are down by around 1.5 points since the start of the year, while rates on home equity loans have dropped by around half a percentage point since January. This is great news for borrowers, particularly knowing that the average homeowner has approximately $330,000 worth of equity right now.
Still, the economic climate has been evolving all year as inflation declined and interest rate cuts started being issued. With one rate cut of 50 basis points issued in September and another quarter-point reduction in November, borrowers considering accessing their home equity may be wondering if they should delay action to better secure a lower interest rate.
For a variety of reasons, however, that could be a mistake. Below, we’ll detail four risks associated with waiting for home equity loan interest rates to fall further.
Start by seeing how low of an interest rate you could lock in here today.
4 risks of waiting for home equity loan interest rates to fall further
The risks of waiting for home equity loan interest rates are numerous. Here are four of the biggest ones right now:
Rates could increase
Home equity loan interest rates, more so than mortgage interest rates, are closely tied to the federal funds rate. And that’s been reduced twice this year already. But inflation for October ticked up, which is something the Federal Reserve was hoping to avoid. If it rises again in November and December, then, the federal funds rate may be paused or, possibly, even hiked again. Waiting for this scenario to become more realistic would be risky, particularly when you can still secure the lowest home equity loan rate in years right now.
Get started with a home equity loan online today.
Your debt may become unmanageable
Credit card interest rates just surged to an average of slightly over 23%. So if you were planning to use your home equity to consolidate your debt or to pay it off, waiting would be risky as your outstanding debt balance could quickly become unmanageable. With the holiday season quickly approaching and a forecast of higher spending versus 2023, it’s highly unlikely that waiting for a slight reduction in a home equity loan rate will offset any additional growth in your already expensive debt.
You could delay a tax deduction
Waiting for an unknown interest rate will also delay a critical tax deduction, should you be planning on using your home equity for major home projects or repairs. That’s because the interest paid on home equity loans and HELOCs is tax-deductible if used for qualifying purposes. But if you wait until January 1 to secure your funding you won’t be able to write off any of the interest paid until you file your next tax return — in 2026. And, depending on your intended usage, that could mean a significant tax deduction delayed just to secure a slightly lower (but not guaranteed) interest rate.
Your credit score could change
It’s important to remember that the home equity loan interest rates you see offered on lender websites are for those borrowers with the highest credit scores. If you have a good or great credit score now — but damage it by overspending during the holidays or by failing to repay high-interest debt — the home equity loan rate you’re ultimately offered may easily negate any potential future rate drops.
This is a major risk of waiting to act. So, if you need the home equity funds now — and have a good enough credit score to qualify for today’s best rates — it may make sense to act promptly.
Learn more about the best home equity loan options available to you now.
The bottom line
When borrowing money, there’s always an inherent risk in waiting to act versus being proactive. But with home equity borrowing, particularly in today’s unique economic climate, these risks become more pronounced. So weigh the above scenarios carefully against your financial needs right now to better determine which course of action works best for you. And consider speaking to a financial advisor or lender who can help answer any specific question you may have.