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Interest rates on home equity lines of credit (HELOCs) are currently more affordable than they have been in quite a while. Over the last 18 months, they’ve fallen from around 9% to about 7%, where they sit today. They’ve fallen almost half a percent in just the first quarter of this year alone.
The decline has been driven by a few different factors, but last year’s Federal Reserve rate cuts and recent geopolitical conflicts both play a role. The question now, though, is whether that decline in HELOC rates will continue. And if it does, can homeowners expect even more affordable HELOC rates on the horizon?
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What will HELOC interest rates look like by the end of 2026? Experts weigh in
Here’s what mortgage pros say may be coming down the pike for HELOC rates by the close of 2026:
Stable HELOC rates are most likely
Unfortunately, many experts don’t see a continued HELOC rate decline in the cards. “The Iran conflict seems to be spooking the market,” Kevin Leibowitz, mortgage broker at Grayton Mortgage, says.
“For rates to fall meaningfully, you’d need the conflict to stabilize, inflation to cool, or the labor market to break — ultimately giving the Fed reason to cut rates,” says Nicole Rueth, senior vice president at The Rueth Team of Cross Country Mortgage. “This scenario feels unlikely in the near term.”
The more likely scenario, pros say, is that HELOC rates stay steady in their current, low-7% range. The Fed has voted to keep the federal funds rate stable at its last two meetings, and most expect that stance to remain the same for the foreseeable future.
“While many homeowners were hoping for lower HELOC rates this year, they aren’t being delivered,” Rueth says. “The more likely scenario, in my view, is that the Fed holds steady and waits to see whether this inflation is truly transitory or something more stubborn. If they stay on the sidelines, HELOC rates stay roughly where they are through year-end. That’s not the answer homeowners were hoping for at the start of 2026, but it’s the honest one.”
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Higher rates are possible, but only under certain conditions
There’s also a chance that HELOC rates rise, experts say, but certain things would have to happen for that to occur.
“Rates would likely rise if inflation reaccelerates or if economic pressures force the Fed to keep rates higher for longer,” says Amanda Erebia, director of retail banking at Amegy Bank.
Geopolitical uncertainty and the pressure it puts on energy prices and global markets could also spur rate hikes, which would trickle down to HELOCs, too, Rueth says.
“We’re already living the upside scenario for rates rising,” Rueth says. “The Iran conflict is a geopolitical shock, and it’s putting real pressure on energy prices and inflation expectations. If that feeds through into hotter Consumer Price Index prints, the Fed’s path to cutting gets narrower, and a hike becomes a genuine possibility rather than a fringe scenario.”
Watch the Federal Reserve and inflation for clues
Ultimately, there will be clues as to where rates are headed, and watching inflation indicators, particularly those released just ahead of future Fed meetings, can help you get a pulse.
“Federal Reserve policy will remain the primary driver of HELOC rates, along with inflation and overall economic growth,” Erebia explains.
If inflation starts to rise, the Fed may increase rates to tamp it down. If inflation falls, it could cut rates to spur economic activity.
“HELOC rates are almost always pegged to the prime rate, and the prime rate follows the Fed,” Rueth says. “Until the Fed moves, the prime rate won’t move.”
The Fed is set to meet six more times this year. Its next meeting concludes on April 29. As of April 10, the CME Group FedWatch tool showed a 98.4% chance that it will keep rates steady at that time.
The bottom line
HELOC rates are likely to stay stable through the end of the year, according to experts, but the chance of rates moving upward remains. If locking in a fixed, low rate now is a priority for your goals, then a home equity loan may be a better option, as these lump-sum alternatives allow you to tap into your home equity but come with set rates for the entirety of your loan term. You can also look into other options, like cash-out refinancing. Talk to a mortgage professional if you’re not sure which home equity option is best for your budget.