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interest rates, already on a slow but consistent for much of the last 18 months, fell to a new 2025 low this week. Now at an average of just 8.23%, home equity loan rates are falling again, according to data. The recent decline marked a 13 basis point drop from May 14, and it continued the trend of home equity loan rates declining after they started 2024 close to 9%. 

This new decline, however, is a particularly important one as it comes amid a , which hasn't been reduced since December 2024. And it emphasizes the cost-effectiveness of this borrowing tool right now, as rates here are materially lower than those available with personal loans (over 12%) and credit cards (over 22%).

As borrowers have experienced in recent years, however, the interest rate climate can be volatile. So with home equity loan rates hitting a new 2025 low, it could make sense to take advantage of this timely opportunity while readily available. Below, we'll detail three reasons why it makes sense to take action now.

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Here are three timely reasons why you should consider locking a home equity loan rate now:

As noted above, it's been a bumpy ride down to this low of a home equity loan rate, and there's no telling when rates will go lower, or even if they will. Fortunately, that will remain the same for borrowers even if the interest rate climate reverses course in the weeks or months ahead. 

Considering that rates here are lower than most alternatives, then, it makes sense to secure this affordability while you can. And, if rates decline in a significant way in the future, you could always at that point. In the interim, however, you'll be protected against any future rate hikes ahead.

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For much of 2025, a was the more affordable option when measured against a home equity loan. While home equity loan rates remained relatively unchanged, HELOC rates continued to fall and, at one point, were more than . 

But that window of opportunity has since passed. HELOC rates have been steadily climbing in recent weeks and are now virtually the same as a home equity loan at an average of 8.20%. Unlike home equity loans, however, HELOCs have variable rates that , meaning that they could rise even higher should trends continue as they have so far in May. In this climate, then, a home equity loan may be the better option.

Waiting for an ideal interest rate scenario isn't realistic for many homeowners right now, and it's arguably not necessary when home equity loan rates are as low as they are currently. Your financing needs, meantime, may not be able to wait for the interest rate climate to cool any further, particularly if you're planning to use your home equity to t, like that accumulated with credit cards, for example. Considering that credit card rates are almost three times higher than home equity loan rates, it makes sense to use the latter to pay off the former now – and not delay and damage your financial standing any further.

With home equity loan interest rates at a new low for 2025, homeowners in need of additional financing may want to take advantage of this opportunity now. Considering that this low rate will be fixed, that alternatives like HELOCs are actually becoming more expensive and the urgent financing needs that a home equity loan can help cover, many would benefit by shopping around for lenders and rates now. Just be sure to calculate your repayment costs with precision as your home functions as collateral in this scenario and it could be if you're ultimately unable to repay all that was withdrawn.

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