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Home Equity Loan & HELOC Rates Remain at Three-Year Low

  //house-home.news-articles.net/content/2026/02/1 .. y-loan-heloc-rates-remain-at-three-year-low.html
  Published in House and Home on Friday, February 13th 2026 at 10:04 GMT by WGME
      Locales: New York, UNITED STATES

ROCHESTER, N.Y. - February 13th, 2026 - Homeowners considering tapping into their home equity are benefiting from a sustained period of stability in home equity loan and Home Equity Line of Credit (HELOC) rates, which remain at a three-year low. Data released today by Freddie Mac indicates that both fixed-rate home equity loans and adjustable-rate HELOCs have largely held steady, creating a potentially advantageous environment for borrowers.

The average rate for a popular 5/1 adjustable-rate HELOC currently stands at 7.34%, coupled with an average fee of $94. Simultaneously, the average fixed-rate home equity loan (15-year term) is reported at 7.74%, with average fees of $76. These rates represent a significant cooling from the 7.87% and 7.89% seen for HELOCs and home equity loans respectively, just one year prior. While some fluctuation has occurred, the overall trend has been one of consistent rates over recent weeks.

This stabilization is prompting Freddie Mac to encourage homeowners to explore leveraging their equity for various financial needs. "Homeowners have an opportunity to tap into their home's equity, whether it's for home improvements, debt consolidation or other financial needs," the organization stated in a press release. The potential uses are broad, ranging from funding significant renovations to consolidating high-interest credit card debt, or even covering unexpected expenses.

Understanding HELOCs vs. Home Equity Loans

It's crucial to understand the difference between a HELOC and a traditional home equity loan. A home equity loan provides a lump sum of money upfront, with a fixed interest rate and predictable monthly payments over the loan's term (typically 5-30 years). This is ideal for one-time expenses where borrowers want payment certainty.

A HELOC, on the other hand, functions more like a credit card. It offers a revolving line of credit, allowing homeowners to borrow, repay, and borrow again during a 'draw period' (typically 10 years). Interest rates on HELOCs are typically variable, tied to a benchmark rate like the Prime Rate, meaning they can fluctuate with market conditions. After the draw period ends, the HELOC enters a repayment period, where borrowers must repay the outstanding balance. The 5/1 HELOC refers to an adjustable rate that's fixed for the first five years, then adjusts annually after that.

Expert Caution: Volatility Remains a Factor

Despite the current favorable conditions, experts are advising borrowers to proceed with caution. Freddie Mac itself acknowledges the potential for rate volatility. "Borrowers should be aware that rates are subject to change, influenced by factors such as inflation, the Federal Reserve's actions and the housing market," the release notes. The Federal Reserve's monetary policy remains a key driver of interest rates across the board. Any indication of continued inflation, or a shift in the Fed's stance on monetary easing, could quickly push rates higher.

Economists are particularly focused on the upcoming release of inflation data. While recent reports have shown a cooling trend, a resurgence in inflationary pressures could prompt the Fed to maintain or even raise interest rates. The housing market's performance is also playing a role. A strong housing market generally correlates with higher interest rates, while a slowdown could lead to rate cuts.

Long-Term Implications & Strategic Considerations

This period of relative stability may not last. Experts predict that as the economy strengthens, interest rates will eventually begin to rise again. Therefore, homeowners who are considering utilizing their home equity should act sooner rather than later to lock in these lower rates. However, it is imperative to carefully assess one's ability to repay the loan, factoring in potential future rate increases (especially with adjustable-rate HELOCs).

Furthermore, borrowers should compare offers from multiple lenders to ensure they are getting the best possible terms. Fees, loan terms, and interest rates can vary significantly. Consulting with a financial advisor can also help homeowners determine if tapping into their home equity aligns with their overall financial goals and risk tolerance. Responsible borrowing is paramount, and homeowners should avoid taking on more debt than they can comfortably manage. The allure of low rates shouldn't overshadow the long-term financial implications of a home equity loan or HELOC.