HELOC Rates Fall 60 Basis Points This Year — What Borrowers Should Know

Home equity line of credit (HELOC) rates have eased materially in 2025, dropping roughly 60 basis points year-to-date as of Dec. 8. The move reflects softer Treasury yields, increased lender competition and a calmer inflation backdrop that has relieved some upward pressure on variable borrowing costs. For homeowners who tapped home equity during the peak rate period, the decline offers an opportunity to reduce borrowing expenses or refinance existing lines on better terms.

Lenders have responded differently: some banks trimmed advertised variable margins, while others promoted fixed-rate HELOC features to attract customers wary of rate volatility. Borrowers shopping today will find a wider range of options than earlier in the year, but effective pricing still varies with credit score, loan-to-value (LTV) ratio and bank relationship. Those with strong credit profiles and low LTVs generally secure the most favorable margins and promotional pricing.

Economically, the pullback in HELOC rates tracks a broader drop in medium-term Treasury yields and a pause in aggressive policy tightening from the Federal Reserve. While the Fed’s path remains data-dependent, the recent trajectory has pushed many short- and intermediate-term consumer lending rates lower, benefiting HELOC offers tied to prime or Treasury-based indexes.

Practical advice for homeowners: review your current HELOC agreement to understand margin, index and any rate floors; compare variable and fixed-rate conversions; and get multiple quotes. If you expect rates to fall further, a variable-rate line may be attractive, but if you prefer certainty, consider converting part or all of the balance to a fixed-rate option. Also confirm fees, draw period terms and whether converting to a closed-end home equity loan imposes prepayment penalties.

Lower HELOC rates increase options for debt consolidation, home improvements and liquidity needs, but shoppers should balance immediate savings against the risk that rates could reverse. Working with lenders to negotiate margin, or timing a fixed conversion when pricing is favorable, can lock in savings. As always, compare offers from banks, credit unions and online lenders to find the best mix of price and terms for your situation.