For borrowers looking to access some extra financing, interest rates play a key role in their considerations. Unfortunately, rates on everything from mortgages to personal loans to credit cards have all been high in recent years. Credit card interest rates, for example, just hit an average of 23% last week, the highest they’ve ever been. And while personal loans are better, they’re still hovering around 13% right now, which could easily negate any benefits obtained by choosing this option.

Home equity lines of credit (HELOCs) for current homeowners, then, become the natural best alternative. With the average homeowner having over $300,000 worth of equity to use and interest rates on this product almost three times lower than credit cards, this could be the smart way to borrow a large amount of money right now. But interest rates do also factor into the decision to use your home equity. And owners should calculate their potential monthly payments closely as the home functions as collateral in these circumstances. 

That said, HELOC rates are relatively low and they could become even lower as the Federal Reserve continues cutting interest rates this week (their first cut in more than four years was issued in September). Before getting started, then, borrowers should know what a good HELOC interest rate is now that rates are falling again.

See how low of a HELOC interest rate you’d be eligible for here.

What’s a good HELOC interest rate now that rates are falling again?

The average HELOC interest rate is 8.68% right now, so if you can get a rate slightly lower than that, then you can consider it “good.” The better news is that that rate is set to drop again, possibly as soon as this week. While the Fed doesn’t directly dictate the rates lenders offer on home equity borrowing products, they do greatly influence them. So if a 25 basis point cut to the federal funds rate is issued when the Fed concludes its next meeting on November 7, HELOC rates could fall again, even if they’re unlikely to fall by the same increment.

That said, waiting for HELOC rates to fall isn’t necessary. HELOC interest rates are variable and subject to change on a monthly basis as the rate climate evolves. So if you open a HELOC with an 8.68% rate right now and then rates fall in the weeks that follow, don’t worry. Your HELOC rate will likely fall as well when December arrives. And it could fall again in January and the months that follow, as long as the declining interest rate trend continues. 

Get started with a HELOC online now.

How to get a low HELOC rate now

While there’s no precise way to secure a below-average HELOC interest rate, taking the following steps in conjunction with one another can help:

• Improve your credit score: The lowest HELOC rate offers will be reserved for those with the highest credit scores. So if your credit needs improving, boost it now – before applying. Since rates are seemingly on the decline, you may have some more time to work on this than you would have in recent years when rates were continually hiked.
• Shop around for lenders: Just like you wouldn’t buy the first home you saw or the first car you test-drove, don’t jump on the first HELOC rate offer you’re given. Instead, shop around for lenders to find one offering the lowest rate and best terms. Consider getting quotes from at least three different lenders before proceeding. 
• Monitor select dates: This week is a perfect time to open a HELOC after the Fed issues another rate cut. But there could be other upcoming dates, like when the next unemployment or inflation report is released, in which rates could dip. Monitor these select dates, then, for a potential opportunity to capitalize on a lower rate.

The bottom line

Right now, a “good” HELOC interest rate is anything that’s 8.68% or lower. But this is a moving target as the Fed continues on its rate-cutting campaign and as HELOC interest rates fall in response. So use this time to improve your credit score, start shopping for lenders and monitoring select dates for opportunities to secure an even lower HELOC interest rate. With rates on the decline and variable HELOC rates poised to take advantage, now could be a smart time to borrow money with this unique product.