Interest rates are heading down again, according to the Federal Reserve. On Thursday, the Fed issued another cut to its federal funds rate, the second in the last three months. Now at a range between 4.50% and 4.75%, the rate is down 75 basis points from where it was in early September and it could fall further again when the Fed meets for the final time in 2024 on December 17. 

While these cuts will reduce what savers can earn with high-yield savings and certificates of deposit accounts (CDs), they will help borrowers who have been contending with higher rates on a variety of loan products. For those who are considering accessing their home equity now, or for those who already have a home equity line of credit (HELOC), this can be particularly advantageous. So what does the new Fed rate cut mean for HELOC interest rates? That’s what we’ll break down below.

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

What the Fed rate cut means for HELOC interest rates

In short: The latest Fed rate cut is good news for HELOC interest rates and for those borrowers who have already decided to access their home equity with the line of credit. That’s because HELOC rates tend to follow the Fed more closely than other products. Mortgage rates, for example, influenced by factors like the 10-year Treasury yield, have not dropped as significantly as home equity loan rates have in recent months. But home equity rates more closely match the path that the federal funds rate takes, so if that’s declining HELOC rates will, too.

This can be seen clearly because HELOC rates change daily and are variable, meaning that the HELOC rate you saw listed on lender websites early this week is likely lower now and could be even lower next week. With an additional cut in December pegged at an almost 65% likelihood by the CME Group’s FedWatch tool, rates on HELOCs could fall further still. And if that likelihood increases based on additional economic considerations, lenders may start pricing in that reduction in advance of it being formally issued.

This is all positive news for both those who have yet to apply for a HELOC and for those who already have one. Since HELOC rates change monthly, current borrowers will likely see reductions in their upcoming payments and, unlike home equity loans, they won’t need to refinance to secure the lower, prevailing rate as HELOCs adjust independently with no action required on behalf of the borrower. For all of these reasons, then, and with the average amount of home equity particularly high currently, right now is a great time to open a HELOC.

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What about home equity loan rates?

Home equity loan rates will also fall with this latest Fed cut, but it’s unlikely to be by the same increment the federal funds rate was cut by. Still, home equity loan rates are slightly lower than HELOCs now (8.41% versus the HELOC’s average of 8.70%). And home equity loan rates are fixed, meaning borrowers who take out a loan now won’t have to worry about any future rate volatility. At the same time, they won’t be able to capitalize on any additional rate cuts that are issued, either. So borrowers will need to weigh the risks of waiting versus the low rate they can lock in now to determine which is the best option for their unique financial situation.

The bottom line

A Fed rate cut, even in a small amount, is good news for all types of borrowers, but particularly for those who have or are considering a HELOC. Still, it’s critical to remember that rates on home equity products are lower than most alternatives because the home in question serves as collateral – and you could lose it if you don’t repay all that you’ve withdrawn. So go into the home equity borrowing situation clear-eyed and focused to avoid overborrowing from one of your most critical assets.

Have more HELOC questions? Learn more here now.

President-elect Donald Trump took to Truth Social on Friday to reiterate that he doesn’t plan to sell shares of Trump Media & Technology Group. He also called for an investigation from “the appropriate authorities” into “market manipulators or short sellers,” whom executives at the company and shareholders have previously blamed for volatility in the stock, which trades under the ticker symbol DJT.

DJT shares jumped shortly after Trump’s post, gaining as much as 16% on Friday. The stock rose $3.15, or 11.4%, to $30.84 in early afternoon trading, partly reversing a 23% plunge on Thursday that had trimmed some of the company’s gains in the run-up to the November 5 election.

Trump, who is the biggest shareholder of Trump Media with a 57% stake, said the business has been the target of “probably illegal rumors and/or statements” that he said allege he plans to sell shares of the company, which owns the Truth Social platform. In September, Trump had vowed not to sell his stake after a lock-up period expired for Trump Media insiders, allowing them to sell for the first time since the stock went public in March. 

Trump Media, whose DJT ticker is the same as Trump’s initials, has seen extreme volatility on Nasdaq, with its shares swinging wildly on news related to the president-elect. That has prompted comparisons of DJT with meme stocks, or companies that trade on social media buzz rather than financial fundamentals such as revenue and profit growth. 

Trump’s call for an investigation into trading of the stock highlight potential conflicts of interest between his role as the nation’s chief executive and his business interests, with his holdings in the company valued at $3.6 billion as of Friday afternoon. As president, Trump will not only have oversight of many federal agencies, but will also appoint the head of the U.S. Securities and Exchange Commission, the agency that regulates the securities industry. 

Although there’s no requirement that presidents sell their financial assets when they take office, most U.S. presidents have opted to put their business holdings into a blind trust, according to the Brennan Center for Justice, a nonpartisan law and policy institute.
A blind trust is managed by an independent trustee, and the president or other official who created the trust isn’t allowed to advise or consult with the trustee on business decisions.

During Trump’s first term as president, he chose not to place his company, the Trump Organization, into a blind trust, opting instead to hand over management of the company to his oldest two sons, Donald Jr. and Eric, along with its longtime chief financial officer, Allen Weisselberg. (Weisselberg was released from jail in July after pleading guilty to giving false testimony about the size of Trump’s triplex apartment as part of a civil fraud trial.)

Trump’s arrangement during his first administration was flagged by some ethics experts as problematic, with former chief White House ethics lawyer Norm Eisen writing in 2017 that it failed to resolve the conflicts of interest between Trump’s business holdings and his role as president. 

Trump Media stock price chart

Trump Media has attracted short sellers, or investors who seek to make a profit when a stock tumbles. That drew accusations from Trump Media CEO Devin Nunes, a former Republican congressman, that these investors have manipulated the stock. Nunes has requested investigations by lawmakers and the Nasdaq stock market, where DJT is listed.

Because of Trump’s majority ownership of DJT stock, the stock would likely drop if he sold his shares “for any reason,” noted S3 Partners in a November 6 research note.

In his post on Truth Social Friday, Trump said he believes in Trump Media, and refuted claims that he is interested in selling shares. 

“THOSE RUMORS OR STATEMENTS ARE FALSE. I HAVE NO INTENTION OF SELLING!” Trump wrote. “I hereby request that the people who have set off these fake rumors or statements, and who may have done so in the past, be immediately investigated by the appropriate authorities.”