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HELOC Rates Plummet in 2024
HELOC interest rates have significantly dropped in 2024 due to Federal Reserve rate cuts, presenting a potentially advantageous borrowing opportunity compared to home equity loans. However, responsible borrowing is crucial to avoid jeopardizing home ownership.
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- How much have HELOC interest rates dropped in 2024?
- HELOC rates started 2024 at 10.16% but have since dropped to 8.70%, a decrease of almost 1.5 percentage points. Further decreases are expected as the Fed continues to cut interest rates.
- What is a critical risk to consider when taking out a HELOC?
- It's crucial to avoid overborrowing with a HELOC, as your home serves as collateral, and failure to repay could result in the loss of your home. Borrow only what you can comfortably afford to repay.
- What factors are contributing to the decline in HELOC interest rates?
- The decrease in HELOC rates is primarily due to the Federal Reserve's interest rate cuts in response to cooling inflation. As inflation continues to decline, and with anticipated further rate cuts, HELOC rates are projected to fall further.
- What is the primary advantage of a HELOC over a home equity loan in the current market?
- While home equity loans currently have slightly lower rates (8.41%) than HELOCs (8.70%), HELOCs offer the advantage of variable rates, allowing borrowers to benefit from future rate decreases. Home equity loans require refinancing to adjust rates.
- Under what circumstances would a HELOC be a more suitable option than a home equity loan?
- A HELOC may be preferable to a home equity loan if you anticipate further interest rate cuts. HELOCs' variable interest rates adjust to the market changes whereas home equity loans have fixed rates, requiring costly refinancing to adjust.