10-Year HELOC Rates Hit New High – Forbes Advisor


Editorial Note: We earn a commission on partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors.

The average rate on a 10-year HELOC, or home equity line of credit, is 6.09%, according to Bankrate.com. Meanwhile, the rate on a 20-year HELOC is 7.33%, down from last week.

Home equity lines of credit allow homeowners to convert their equity – the appraised value of the home minus anything owed to the mortgage lender – into cash. Often referred to as HELOCs, these products give owners the flexibility to use the money only as needed and only pay interest on what is used.

Related: Best home equity lenders

Current HELOC rates

10-year HELOC rate

The average interest rate on a 10-year HELOC is 6.09%, the same as last week. This week’s rate is the highest in a year.

At the current rate, a 10-year HELOC of $25,000 would cost a borrower about $127 per month over the 10-year draw period.

A HELOC has a fixed drawdown period, often 10 years, followed by a repayment period. The duration of the HELOC is generally the same as its repayment period. So a 10-year HELOC can give you 10 years to use the funds and 10 years to repay. HELOCs have variable interest rates, which means the interest rate can change as you pay it back.

Borrowers generally only pay interest during the drawdown period, but can also repay the principal, although this is not mandatory.

20-year HELOC rate

The average interest rate on a 20-year HELOC is 7.33%, down slightly from 7.36% last week. This week’s rate is above the 52-week low of 5.14%.

At the current interest rate of 7.33%, a $25,000 20-year HELOC would cost about $153 per month during the draw period.

HELOCs vs home equity loans

While both tap into your home equity and are backed by your home or other property, HELOCs and home equity loans have key differences.

A HELOC allows you to withdraw money as needed and only pay interest on what you borrow during the drawdown period (usually 10 or 20 years). You repay the entire balance plus interest during the repayment period (usually 20 years). Home equity loans require homeowners to take their funds all at once and pay off the balance with fixed monthly payments.

This can make a home equity loan a better option if you have a large project and need one-time financing. Home equity loans have fixed rates, while HELOC rates are variable.

How to find the best HELOC rate

It’s more common to start your search for the best HELOC rate with the lender who holds your first mortgage, as they already know your home and your credit profile.

You can also research rates online to compare lenders with your current mortgage lender before you fully apply for a HELOC. You may want to prequalify online with a few lenders, which can give you an idea of ​​the terms and rates they offer, as well as the fees they will charge.

Lenders set their HELOC rates based on what’s called the prime rate, which is what banks and other financial institutions use for creditworthy borrowers who take out loans and lines of credit. The prime rate is in turn based on the federal funds rate, which is set by the Federal Reserve.

HELOC Rate Information

If you want to tap into the equity in your home, now is the time to do it. The Federal Reserve has signaled that it plans to raise its federal funds rate several times in 2022. This usually leads to higher HELOC rates.

Currently, the 52-week high on a 10-year HELOC is 6.09%, while the 52-week low is 2.55%. The 52-week high on a 20-year HELOC is 7.51% and the 52-week low is 5.14%.

Frequently Asked Questions (FAQ)

Is HELOC interest tax deductible?

Yes, if you itemize deductions, interest charges may be deductible if you use HELOC funds to pay for home improvements.

Will taking out a HELOC impact my credit rating?

Lenders will perform a credit check when you apply for a HELOC, as with any credit product, and it will temporarily lower your credit score. But if you make timely repayments, your credit score will recover quickly.

It’s important to keep in mind that any HELOC is secured by your home, like a mortgage. This means that failure to make timely repayments could put you at risk of losing the property.

What are the alternatives to HELOCs?

You can leverage the equity in your home with home equity loans, which differ from lines of credit in that they are taken out for a fixed amount and repaid regularly with a fixed interest rate.

You can also consider a cash-out refinance, which involves refinancing your current mortgage into a smaller mortgage and pocketing the difference in cash.


Previous Cayuga County Property Transfers: August 21, 2022 | Folders
Next Berrien County Youth Fair Results | New