The Federal Reserve voted unanimously to hold interest rates steady following its latest two-day meeting—the first under new Fed Chair Kevin Warsh. However, don’t get too comfortable with the pause. Fed officials are divided on what comes next: eight see rates holding steady, but nine project one or more rate hikes later this year. Only one official anticipates a rate cut.

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If the Fed decides to hike rates in the coming months, variable borrowing costs—including HELOCs—will likely rise almost immediately.

Today’s Average Equity Rates (As of June 18, 2026)

Current national averages are based on a strong borrower profile (minimum 780 credit score and a maximum 70% combined loan-to-value ratio):

• Average HELOC Rate: 7.25% (up from its 2026 low of 7.19% last month)
• Average Home Equity Loan Rate: 7.86% (up from its 2026 low of 7.36% last month)
• Current Prime Rate Index: 6.75%

HELOC vs. Home Equity Loan: Which is Right for You?

With traditional mortgage refinance rates stuck above 6%, a second mortgage is the best way for homeowners to unlock cash without sacrificing a beautifully low primary mortgage rate.

1. Home Equity Line of Credit (HELOC)

• How it works: A variable-rate, revolving line of credit. You borrow what you need, pay it back, and borrow again.
• The Catch: Many modern lenders are requiring massive “initial minimum draws” when you open the line. This can erase the primary benefit of a HELOC—only paying interest on exactly what you need, when you need it. Look for lenders with low or zero initial draw requirements.
• Watch for Teaser Rates: Some institutions (like FourLeaf Credit Union, currently offering a 5.99% 12-month intro APR up to $500k) offer low introductory rates. Just remember these reset to a much higher variable rate after the promo period.

2. Home Equity Loan (HEL)

• How it works: A lump-sum payout with a fixed interest rate for the life of the loan.
• The Benefit: Total predictability. Because the interest rate is locked in, your monthly payment never changes, and you don’t have to worry about immediate draw minimums or future Fed rate hikes.

Quick FAQ

What is a “good” rate right now? Because lenders have massive pricing flexibility, rates wildly span from 6% to 18%. Benchmarking your offers against the national averages (7.25% for HELOCs, 7.86% for loans) will tell you if you’re getting a competitive deal.

Is now a good time to tap into home equity? Yes, if you have significant equity and a low primary mortgage. It allows you to fund home improvements or large expenses without disturbing your main mortgage.

What would a $50,000 HELOC cost per month? If you drew the full $50,000 at a 7.25% interest rate, your initial interest-only monthly payment during the 10-year draw period would be roughly $302. However, keep in mind that your payment will fluctuate with the market, and will increase significantly once you enter the 20-year principal repayment period. HELOCs are best used if you plan to borrow and pay off the balance quickly.

Editing by-katie willimas