What Are Current HELOC Rates? June 22, 2022—20-Year HELOC Rates Reach A 52-Week High - Forbes

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Published: Jun 22, 2022, 10:33am
The average rate on a 20-year HELOC, or home equity line of credit, is 7.29%, the highest it has been over the past year, according to Bankrate.com. At the same time, the rate on a 10-year HELOC is 4.89%, up 0.15% from last week.
Home equity lines of credit let homeowners 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 offer owners the flexibility to make use of cash only as needed, and to pay interest only on what’s used.
Related: Best Home Equity Loan Lenders

This week, the average interest rate on a 10-year HELOC is 4.89%, up slightly from 4.74% the previous week and 2.55%, the low over the past year.
At today’s interest rate of 4.89%, during the draw period, a $25,000 10-year HELOC would cost approximately $102 per month during the 10-year draw period.
A HELOC has a set draw period, often 10 years, that’s followed by a repayment period. The HELOC’s term is generally the same as its repayment period. So, a 10-year HELOC may give you 10 years to use the funds and 10 years to repay. HELOCs have variable interest rates, meaning that the interest rate may change as you are paying it back.
Typically, a borrower pays only interest during the draw period.
The average interest rate on a 20-year HELOC is 7.29%, upconsiderably from 6.84% last week. This week’s rate is higher than the 52-week low of 5.14%.
At the current interest rate, a $25,000 20-year HELOC will cost you $152 per month during the draw period.
If you already have a mortgage, some of the requirements for taking out a HELOC will likely be familiar. As a rough rule of thumb, homeowners usually need a maximum debt-to-income (DTI) ratio of 43%; a minimum credit score of 620; a history of on-time mortgage payments; and at least 15% to 20% equity in the home. Some of the specifics may vary from lender to lender.
In addition, lenders typically require an appraisal to determine the value of the home, which in turn determines how much equity the owner has.
With the Federal Reserve raising its fed funds rate, borrowers may see HELOC rates move higher this year. Typically, HELOC rates move in step with rate increases by the Fed.
Currently, the 52-week high on a 10-year HELOC is 5.64%, while the 52-week low is 2.55%. The 52-week high on a 20-year HELOC is 7.29% and the 52-week low is 5.14%.
HELOCs are known as revolving credit. You can draw what you need against the line of credit, pay interest only on what you’ve used and then pay it back. HELOCs typically have terms that allow you to repeat that process over a 10-year period.
In contrast, a home equity loan is a lump-sum fixed amount that you borrow and pay it back in set installments.
The other major difference between HELOCs and home equity loans is that HELOCs have variable interest rates while home equity loans have fixed rates. That may make a home equity loan a better option for someone who has a particularly large project where they need one-time funding. A line of credit, however, may offer more flexibility because you can draw funds as needed; however, it could come at a higher interest cost down the road due to its variable interest rates.
Keep in mind that while HELOC rates may be lower than those on home equity loans now, the Fed is likely to raise interest rates several times over the next year or two, meaning repaying a HELOC will likely be more expensive in the future.
Money you borrow with a HELOC can be used for all kinds of things, not just home improvements. Many homeowners use the proceeds for other big purchases, education costs and more. It’s important to remember that the funds borrowed with a HELOC are subject to variable interest rates, which could rise over time. That may mean other, more fixed-rate forms of financing for things like education are a better bet.
Home equity is calculated by taking the appraised value of your home minus anything you owe a lender, like a mortgage banker.
Yes, you’ll likely see a small dent in your credit score after you apply for a HELOC because lenders perform a credit check to see if you’re a creditworthy borrower. But as long as you make repayments on time, your score should recover quickly.
Just keep in mind that HELOCs are secured by your property, which means that a failure to make timely repayments could put you at risk of losing your home.
Andrea Riquier is a New York-based writer covering mortgages and the housing market for Forbes Advisor. She was previously at Dow Jones MarketWatch, on the housing market and financial markets beats. Before that, she covered macro and central banks for Investor’s Business Daily, and municipal bonds for Debtwire.


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