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It's become an almost weekly item at this point. While interest rates remain elevated on a variety of borrowing products, they've been in a steady decline on for more than a year now. While , that decline has been substantial over the past seven months, approximately, with rates here falling to their . Now, at just an average of 7.95%, are down more than two full percentage points since September 2024, making them not only the but one of the cheapest ways to borrow money altogether.
Still, it's important to remember that HELOC rates can change, even for existing borrowers, thanks to a often by lenders. So this fluidity will need to be accounted for closely to determine long-term affordability. It helps, then, to analyze the short-term future of these rates, particularly this week, as the Federal Reserve meets again for the first time since March. A rate cut courtesy of the central bank, or even a hint toward one, could be powerful enough to . But the opposite actions or comments could have a rising effect. So, will HELOC interest rates fall again this week? That's what we'll analyze below.
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It's critical to remember that predicting the future of interest rates is inherently risky, as any unforeseen factors could cause rates to move upward or downward. That said, HELOC interest rates, at least on the surface, are unlikely to adjust much (or at all) this week. That's because the central bank is widely expected to keep its federal funds rate unchanged at the current range between 4.25% and 4.50%. A continued pause in that rate, then, will do little to change HELOC rates. In fact, many lenders may have already priced into this presumed pause into their current offers, hence the reason why HELOC rates have stayed relatively flat, just , in recent weeks.
That noted, the comments made by Federal Reserve Chairman Jerome Powell after the Fed's meeting on Wednesday could cause HELOC rates to shift, even if a formal rate cut doesn't take place this May. Powell's comments will address the future of rate cuts at the Fed's next meetings in June and July. Should he seem optimistic or even cautiously optimistic that rate cuts could be more realistic in one or both of those meetings, then the rate climate could shift slightly to accommodate that vision – and HELOC rates may fall in response, too. At the same time, any comments there regarding higher rates for longer could cause the opposite to happen.
For what it's worth, the tool has a fed rate cut pinned to a meager 3.1% chance this week. But that rises to around 30% for its June meeting and over 70% for its July meeting. So while a rate cut may not occur this week and, accordingly, HELOC rates may remain steady, additional cuts and declines do look likely for the months ahead. Of course, for those declines as they would with a fixed-rate product, as HELOC rates will adjust independently each month anyway. So, if you know you need the financing and have selected a HELOC as the way to access it, it makes sense to get started now anyway.
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HELOC interest rates are likely to stay steady this week, even with the latest Fed meeting set to conclude on Wednesday. But that's not necessarily a bad thing. With HELOC rates already lower than what's available with a home equity loan, personal loan, or credit card, a HELOC is likely your most cost-effective borrowing option right now. And with the over $300,000 currently, there's likely plenty to borrow, too. So, consider getting started with the process today and be sure to to see if a decline in rates materializes in the form of less expensive HELOC costs for you.
