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If you’re looking for an inexpensive way to access a large, six-figure sum of money, you’d be hard-pressed to find a better option than your home equity. Not only does the average homeowner possess approximately $330,000 worth of equity to utilize right now, but they can do so at an interest rate significantly lower than what can be secured with alternatives like credit cards and personal loans. And with home equity loans, in particular, those interest rates are fixed for the full repayment period, unless refinanced by the borrower.
That said, it’s important to appropriately time your home equity loan application to lock in an attractive interest rate. To do so, borrowers may find it helpful to gauge how far interest rates on this product have fallen, particularly this year as inflation has declined and multiple interest rate cuts have been issued. Below, we’ll show how far home equity loan interest rates have dropped in 2024 for both 10- and 15-year loans and explain why now may be a smart time to act.
See how low of a home equity loan interest rate you could secure here.
How far have home equity loan interest rates fallen in 2024?
Home equity loan interest rates for both loan terms had been hovering at the same level for most of the year but have experienced a substantial drop in recent months. According to historical Bankrate data, a 15-year home equity loan interest rate was 9.08% on January 3, 2024, but it dropped to 8.87% by February 14. 10-year home equity loans, meantime, were averaging 8.73% on March 27.
By May, 15-year home equity loans were averaging under 8.80% and by August they were under 8.70%. 10-year home equity loans hit 8.61% in early September and both broke under 8.50% in early October: 8.47% for 10-year home equity loans and 8.37% for 15-year home equity loans. And they’ve remained in that approximate range since, with 10-year home equity loans averaging 8.52% on November 13 while 15-year home equity loans were at 8.44% on the same date.
So, between January 1 and mid-November, home equity loan interest rates fell by more than half a percentage point. And while that may not seem substantial on paper, that difference can add up to hundreds and possibly thousands of dollars saved over the life of the loan. For many, then, it may be worth taking advantage of this drop in rates now while lenders are still offering better deals.
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Is it worth opening a home equity loan now?
The decision to open a home equity loan is a personal one, particularly when considering that the home functions as collateral in this exchange. That said, there’s a compelling argument to be made for opening a home equity loan, specifically, right now. Rates on the product are lower than they’ve been all year long. But with inflation rising in October, it’s possible that they won’t drop much lower, at least for the foreseeable future.
Plus, by acting now — and by using a home equity loan for IRS-eligible home projects — you may be eligible to deduct the interest paid on the loan when you file your 2024 tax return in the spring. If you delay acting, that deduction will need to wait until you file again in 2026. And, if rates somehow fall much further than they already are, you could always refinance then — but still get the financing you need right now.
The bottom line
Home equity loan interest rates have been on the decline for most of 2024, making the final weeks of the year a smart time to act for many homeowners. And with the potential for rates to stay static versus continually moving downward significantly, many homeowners would benefit from acting now, particularly if their financial needs cannot be delayed. Still, it’s critical to approach this borrowing option with care as you could lose your home if you fail to repay all that you’ve withdrawn.
Learn more about your home equity borrowing options here.