Interest rates were in the news yet again this month after the Federal Reserve completed its third meeting of 2025 and, for the third time in a row, elected to keep the federal funds rate unchanged. At a range between 4.25% and 4.50% currently, the rate has remained frozen since December 2024 when the bank cut it by 25 basis points, following two earlier cuts earlier in 2024. 

These developments have led to changes in rates for both savers and borrowers, the latter perhaps most significantly seen with home equity borrowing. Rates on home equity lines of credit (HELOCs), specifically, have changed dramatically since last September and they're moving in new ways now, as we head into the summer months. 

These trends are particularly important to note when borrowing with a HELOC, as it has a variable interest rate that can change each month for borrowers. That means HELOCs could become more or less expensive, perhaps sooner than expected. To better understand this potential, then, it can help to first understand how HELOC interest rates have changed so far in 2025. Below, we'll detail that progression alongside what to expect next.

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How have HELOC interest rates changed in 2025?

To appreciate the changes in the HELOC interest rate climate that have taken place in the opening months of 2025, it first helps to remember where HELOC rates were last fall, specifically last September. That's when the average rate on a $30,000 HELOC was located just under the double digits (9.99%, to be precise). In the months that followed, however, HELOCs steadily became more affordable. In October, that same rate dropped to 8.94%, then it fell again to 8.70% in November and 8.55% in December.

That downward trend has largely continued in 2025. HELOC rates fell to an 18-month low in January, hitting 8.27%. That was followed by another drop in February to 8.12%, at that point a two-year low in the HELOC rate space. That was soon surpassed by a new, two-year low in March when HELOC rates declined again to 8.03%. And by early April, HELOC rates were comfortably under 8%, registering with an average of just 7.90% on April 3 – more than two full percentage points from where they were in September. This made a HELOC not only the cheapest way to borrow home equity but also one of the cheapest ways to borrow money overall, with interest rates on alternatives like personal loans and credit cards many percentage points higher.

Since early April, however, HELOC rates have responded to market conditions by increasing slightly. They moved up to 7.95% at the end of the month and then increased in a not insignificant way to 7.99% and then 8.14% in the first half of May, according to data. Overall, however, rates are still down from where they started in 2025, and they're significantly lower than they were in September 2024 and even lower than the 10.16% they were found at in January 2024. So, if you need to borrow money now and want to do so at a relatively low interest rate, a HELOC could be one of your better borrowing options in 2025.

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Why a HELOC makes sense now

It may be tempting to dismiss the use of a HELOC based on very recent rate increases. But, overall, HELOCs are still relatively affordable, particularly compared to the 12% rates personal loans come with and the nearly 23% rate credit cards do (a record high). Home equity loans, on the other hand, have higher rates than HELOCs at 8.36%. Additionally, home equity loan rates are fixed and not well-positioned to exploit predicted rate cuts to come later this year, perhaps as early as summer. But HELOCs are, as they'll adjust independently for borrowers. 

Not only will this result in lower payments, should rates decline, but it will save homeowners the costs of refinancing that they would otherwise have to pay if they wanted to secure a lower home equity loan rate. This all noted, HELOC rates can rise as easily as they can fall, so some volatility should be priced in before getting started.

The bottom line

HELOC interest rates have been on a decline for much of the last year or so but recent increases there underline the fluidity of this borrowing product and savvy homeowners should account for changes before getting started. Still, with rates on alternatives materially higher and with the likelihood of rate cuts later this year strong as of mid-May, homeowners who need additional financing right now would be hard-pressed to find a better, less expensive option.