cbsnews.com
HELOC Rates Fall to 8.14%, Offering Cheap Borrowing Option
Home equity lines of credit (HELOCs) interest rates fell six basis points to 8.14% this week, marking them as one of the cheapest borrowing options currently available, compared to home equity loans (8.24%), personal loans (above 12%), and credit cards (around 21%), with an average home equity of $313,000.
- What are the immediate implications of the recent decrease in HELOC interest rates?
- Home equity lines of credit (HELOCs) interest rates dropped to an average of 8.14%, a six basis point decrease. This makes HELOCs currently cheaper than home equity loans (8.24%), personal loans (over 12%), and credit cards (around 21%). The average home equity available is approximately $313,000.
- What factors contribute to the volatility of HELOC interest rates, and what are the potential consequences for borrowers?
- The recent decrease follows prior fluctuations; rates had risen slightly after an 18-month low earlier in 2025. This volatility underscores the variable nature of HELOCs, highlighting the need for careful long-term affordability calculations considering potential rate increases. The overall trend since September 2024, however, shows a two-percentage-point decrease.
- What strategies can borrowers employ to manage the risks associated with variable HELOC interest rates, and what are the trade-offs involved?
- Borrowers should assess long-term affordability by calculating repayments under various rate scenarios. Refinancing a HELOC into a fixed-rate home equity loan is a possible strategy to mitigate the risk of rising interest rates, although it might involve a slightly higher interest rate. Careful consideration of these factors is crucial to avoid potential financial strain and foreclosure.
Cognitive Concepts
Framing Bias
The article frames HELOCs in a very positive light, emphasizing the low rates and the potential for significant borrowing. While it mentions risks, the overall tone encourages readers to consider a HELOC, potentially downplaying the associated financial risks and complexities.
Language Bias
The article uses language that is generally neutral, although phrases like "one of the cheapest ways to borrow money" and "many would benefit" subtly encourage readers towards taking out a HELOC. While not overtly biased, this positive framing could be considered slightly loaded language.
Bias by Omission
The article focuses heavily on the benefits of HELOCs with lower rates, but omits discussion of potential drawbacks such as the risk of foreclosure if unable to keep up with payments, especially with fluctuating interest rates. It also doesn't discuss potential alternatives to HELOCs or home equity loans, such as personal loans with fixed interest rates, which might be more suitable for some borrowers.
False Dichotomy
The article presents a somewhat false dichotomy by suggesting that the only two options are to either take advantage of low HELOC rates or to completely avoid borrowing. It doesn't fully explore the nuanced options that exist within the borrowing landscape, such as fixed-rate loans or different budgeting strategies.
Sustainable Development Goals
Lower HELOC rates can increase access to credit for home owners, potentially reducing financial inequalities and improving their economic opportunities. This is particularly relevant if those with lower incomes were disproportionately affected by higher rates previously.