Inflation dropped slightly in April to 3.4%, but is still below the Federal Reserve’s target goal. This means consumers and experts hoping for interest rate cuts may have to wait a bit longer. And borrowers who are looking to tap their home equity via a home equity loan or HELOC might have to continue to expect elevated rates (but much lower rates than other financial products like credit cards).

That said, with the Federal Reserve meeting already underway, could home equity loan rates fall? We asked some experts for their predictions. 

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Will home equity loan rates drop after the June Fed meeting? 

Here’s what experts believe might happen to home equity loan rates after the June Fed meeting.

Yes, home equity loan rates will fall

Brad Dillman, Chief Economist at RPM Living, a management and investment firm, thinks home equity loan rates might fall, even if the Fed decides to hold rates steady at its June meeting. “If the Fed’s policy rate remains unchanged, we may see some decline in home equity loan rates due to narrowing spreads,” says Dillman.

Richard LaRocca, an associate professor of finance at Wagner College, says home equity loan rates could also drop if the Fed unexpectedly lowers rates. That said, he says this probably won’t happen, at least not in June.

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Home equity loan rates will stay the same 

Instead, LaRocca believes home equity loan rates will likely remain unchanged after the June Fed meeting.

“I do not foresee a Fed rate cut given that the job market, though starting to soften, is still strong enough to keep rates steady,” says LaRocca.

Jason Obradovich, a chief investment officer at mortgage lender New American Funding, agrees with Larocca. 

“Home equity rates are typically tied close to the Fed’s benchmark rate, and we do not expect that rate to move at the next meeting,” says Obradobich. In turn, he says he expects home equity rates will hold steady.

Home equity loan rates will rise

Another possible option is that home equity loan rates could rise, says Rob Cook, Vice President and CEO of Discover Home Loans. Home equity and mortgage rates may see a slight movement up as the market had already discounted immediate movement by the Fed, Cook says. He adds, “We have seen some upward movement in Treasury rates, which could indicate that rates may move slightly.”

The bottom line

Home equity loan rates will most likely stay the same or rise after the June Fed meeting. And even if rates surprisingly fall, Cook says it’s likely to be a gradual decline. So, he says consumers should plan on rates remaining near their current levels, at least for the near term.

If you’re considering getting a home equity loan, locking in your rate now could be beneficial as you won’t have to worry about dealing with possible rate increases in the future. But before you apply for a home equity loan, Obradovich recommends working with a loan officer to discuss options that might be better for your situation. For example, a HELOC might be better if you want to borrow money as needed versus the lump sum you’ll receive with a home equity loan.

Learn more about your home equity borrowing options here now.