Despite some periods of volatility, rates on home equity loans have been on a slow but steady decline for the past year or so. And while home equity line of credit (HELOC) rates have been a bit less predictable, right now, rates on these lines of credit are substantially lower than they were a year ago.

In recent weeks, though, things have taken a turn. Rates on both products have started to rise again, due, in large part, to a lack of rate cuts by the Federal Reserve. The central bank has held its federal funds rate steady since late 2025, with no end to the pause in sight. And, rising inflation is also factoring into this equation.

Is that trend going to continue, though? Or could homeowners expect lower home equity loan and HELOC rates in the near future? Here's what pros predict could happen to these rates this summer.

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What needs to happen for home equity and HELOC rates to fall this summer

The ideal outcome is that home equity loan and HELOC rates fall this summer, making it more affordable for homeowners to borrow against their equity to access cash or consolidate debt. For that to happen, though, experts say a lot needs to change. 

"We will need to see a true resolution to the Iran conflict, a decrease in inflation and further contraction in the job market," says Kenisha Forbes, director of loan processing for Georgia's Own Credit Union. 

Falling inflation is key, at least for HELOCs, as that would potentially push the Fed to cut its federal funds rate. And that, in turn, would lead to a drop in the prime rate. 

"HELOCs are tied to the prime rate, so lenders will offer their HELOCs at the prime rate plus their specific margin," says Lynette Arrasmith, mortgage advisor for Churchill Mortgage. "In order for the HELOC rates to go down, the fed rate needs to go down."

Ultimately, though, experts aren't particularly optimistic about the chances of that happening over the next few months. 

Adam Slack, senior vice president of mortgage lending at CrossCountry Mortgage, calls a significant decline in home equity rates "unlikely" this summer.

"I wouldn't count on a meaningful drop in the near term," Jeff DerGurahian, chief investment officer and head economist at loanDepot, says.

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What needs to happen for HELOC and home equity rates to rise this summer

What's more likely, experts say, is that rates on home equity loans and HELOCs will rise. That might happen if the war in Iran continues, sending gas prices and inflation up even further. 

"Rates could increase if inflation proves more persistent or if there's a prolonged conflict," Slack says. "Factors such as rising oil and gas prices or supply chain disruptions can contribute to inflation, which may influence the Federal Reserve policy and mortgage rate trends."

And, inflation has already notched up quite a bit since the war began. At 4.2% currently, the U.S. inflation rate is now at its highest point in over three years.

"If inflation stays hot, employment remains strong, or tensions flare again, that could keep upward pressure on rates," DerGurahian says.

What needs to happen for HELOC and home equity loan rates to stay constant this summer

It's also possible that rates stay steady this summer. DerGurahian says that's more likely to occur with HELOC rates than home equity loans, since those rely heavily on the Fed rate.

"HELOC rates are likely to stay fairly steady unless the Fed makes a move, but the risk is tilted more toward them rising than falling," DerGurahian says. "That said, it's unlikely that new Fed Chair Kevin Warsh would move to hike rates so soon after stepping into the role."

Home equity loans are less likely to stay stable, as they're impacted by more factors and are long-term products, not short-term variable ones, like HELOCs.

"In terms of where home equity rates are headed, the next couple of months could be tricky," Forbes says. "If nothing else, what we can bank on is that the current climate is unpredictable."

The bottom line

Accurately predicting where home equity borrowing rates will head is nearly impossible, so if you're eyeing a home equity loan or HELOC, experts say the best thing you can do is focus on your goals for the loan. When you can achieve that at a rate and payment you can afford, it may be time to pull the trigger.

"What I would advise for anyone currently interested in a home equity loan is to focus on the reason for the home equity loan," Forbes says. "The smart play right now is debt consolidation and home improvement. A 7% interest rate is still substantially lower than a 24% plus credit card rate."