cbsnews.com
HELOC Rates Expected to Fall Further After December Fed Meeting
HELOC interest rates have dropped from 10.16% on January 3, 2024, to 8.53% on December 12, 2024, and are expected to fall further after the December Federal Reserve meeting, which is anticipated to cut the federal funds rate by 25 basis points; however, the actual change may be muted due to lenders adjusting rates ahead of Fed action.
- What immediate impact will the anticipated December Federal Reserve rate cut have on HELOC interest rates?
- Home equity lines of credit (HELOCs) interest rates have fallen from 10.16% on January 3, 2024, to 8.53% on December 12, 2024. A further decrease is anticipated following the December Federal Reserve meeting, where a 25 basis point cut to the federal funds rate is expected. However, the actual change might be smaller than predicted due to lenders adjusting rates in advance of Fed actions.
- How do lenders' anticipatory rate adjustments influence the relationship between Federal Reserve actions and HELOC rate changes?
- The decline in HELOC rates reflects broader economic trends impacting interest rates. The CME Group's FedWatch tool predicts a 94.7% chance of a December rate cut, influencing current market expectations. Lenders' anticipatory adjustments partially explain the September mortgage rate plunge preceding a significant Fed rate cut.
- What are the long-term implications for HELOC borrowers, and what alternative financing options should be considered alongside HELOCs?
- HELOC rates' downward trend is likely to continue into 2025 if current economic factors persist. Borrowers benefit from variable rates, automatically adjusting to reflect market changes. Those considering a HELOC should act now to take advantage of potentially lower rates, while also exploring alternatives like reverse mortgages.
Cognitive Concepts
Framing Bias
The article frames HELOCs positively, emphasizing their low interest rates and potential for further decline. The headline and opening paragraphs immediately highlight the advantages of HELOCs, potentially influencing readers to favor this option without fully considering the risks. The inclusion of calls to action such as "See what rate you could qualify for here" and "Get started with a low-rate HELOC online today" further reinforces this positive framing.
Language Bias
The article uses generally neutral language but employs phrases like "relatively cheap" and "smart time to get your financing in order" which lean towards positive connotations. While not overtly biased, these choices subtly influence the reader's perception of HELOCs. More neutral alternatives could be "comparatively low cost" and "favorable time to explore financing options.
Bias by Omission
The article focuses heavily on HELOCs and their potential rate changes, but omits discussion of other home equity financing options beyond reverse mortgages. It doesn't explore the potential downsides or risks associated with HELOCs in detail, such as the possibility of negative amortization or the impact of a significant drop in home value. The omission of diverse perspectives on HELOCs and alternative financing strategies could limit a reader's understanding of the broader financial landscape.
False Dichotomy
The article presents a false dichotomy by primarily contrasting HELOCs with reverse mortgages as the only alternatives for accessing home equity. This ignores other options like home equity loans or cash-out refinancing, potentially misleading readers into believing they have limited choices.
Sustainable Development Goals
Lower HELOC interest rates can make home equity financing more accessible to a wider range of borrowers, potentially reducing financial inequalities. The article highlights that HELOCs have remained relatively cheap compared to other loan options, benefiting those who might otherwise struggle with high-interest rates.