Taking out a Home Equity Line of Credit (HELOC) used to feel like a no-brainer—rates were low, home values were rising, and tapping into your equity was one of the cheapest ways to borrow. But here in June 2025, the picture looks a lot more complicated. HELOC rates have more than doubled in just a few years, averaging 8.22%, and while there are signs of relief on the horizon, the broader economy still feels fragile. The Federal Reserve is holding rates steady while inflation lingers, housing inventory is climbing, and whispers of a mild recession are getting louder. At the same time, American homeowners are sitting on more equity than ever before, and new options have emerged—like fixed-rate HELOCs, equity-sharing agreements, and alternatives that work even if your credit isn't perfect. So is now actually a good time to pull the trigger on a HELOC? The answer depends on your goals, your risk tolerance, and which route you take to access your home's value.
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The Current HELOC Landscape
Interest Rates: Still High, But Trending Down
HELOC rates have climbed steeply over the last few years, largely mirroring the Federal Reserve's aggressive stance on inflation. From rates below 4% in 2021 to over 8% today, borrowers are facing much higher costs to access their home equity. But there are subtle but important shifts happening. Some lenders have begun offering rates as low as 6.49% APR for well-qualified borrowers, especially those with strong credit and low loan-to-value ratios. For example, Guaranteed Rate currently offers some of the most competitive HELOCs on the market, including streamlined digital applications and flexible draw terms that make it easier to tap equity without a full refinance. And across the board, average rates have dipped slightly from their 2024 peaks—down from the 8.3% range to roughly 8.14% in some lender surveys.
For context, borrowing $50,000 today costs over $100 less per month than it did this time last year, thanks to that modest rate drop. That drop may continue if the Fed starts cutting rates later this year—but that's far from guaranteed.
Fed Policy and Inflation Pressures
Since most HELOCs have variable interest rates tied to the prime rate (which tracks closely with the Fed funds rate), the Federal Reserve's decisions matter a great deal. Right now, the Fed has signaled its intent to hold rates steady in the 4.25%–4.5% range through the end of Q3 2025, citing persistent inflation and mixed signals on growth. Core PCE inflation remains stubbornly above target at 2.5%, while the overall economic growth outlook has been revised downward to just 1.4% for the year. With the chance of a recession by early 2026 now estimated at 36%, some analysts expect the Fed to begin easing rates by late 2025—though timing and scale remain uncertain.
Home Equity and Housing Market Health
Americans Are Sitting on Record Home Equity
Despite rate pressures, one thing's certain: homeowners have more tappable equity than ever. Recent data shows that 48 million U.S. homeowners have access to a combined $11.5 trillion in usable equity, with average equity per household sitting at $313,000. That's a substantial cushion for borrowers looking to fund home renovations, pay off higher-interest debt, or simply have a rainy-day buffer. In fact, second-lien borrowing (which includes HELOCs) grew 22% year-over-year in Q1 2025, reaching nearly $25 billion in new draws. That growth suggests strong consumer demand, despite rising borrowing costs.
For those with good credit and stable income, a traditional HELOC through lenders like Guaranteed Rate can be a straightforward way to leverage that equity. But if your credit score is less than perfect, traditional lenders may hesitate. In that case, Point.com offers a different solution—an equity-sharing agreement where you get a lump sum of cash now, in exchange for a share of your home’s future appreciation. No monthly payments. No interest. And it’s available to many borrowers who wouldn't qualify for a conventional HELOC.
Housing Market Outlook: A Tenuous Balance
The housing market in mid-2025 is at something of a crossroads. On one hand, price appreciation has slowed to a crawl, with forecasts calling for 0%–3% growth for the year. On the other, inventory has surged—up more than 30% year-over-year—adding supply-side pressure that could temper further gains. While there are no signs of an imminent crash, many economists warn that a soft correction in home values is possible if economic conditions deteriorate. For HELOC borrowers, that introduces a key risk: declining home values could reduce your available credit or even lead lenders to freeze or lower your line of credit mid-term.
Weighing the Pros and Cons
Why a HELOC Might Make Sense Right Now
From a purely financial standpoint, HELOCs still offer compelling benefits—especially compared to alternatives. Credit cards are currently averaging around 24% APR, and personal loans hover near 12.4%. That makes even an 8% HELOC feel like a bargain in relative terms. Moreover, most HELOCs come with an interest-only draw period (typically 10 years), offering lower monthly payments and more cash flow flexibility during that phase. And if the Fed does eventually pivot to rate cuts later in the year or in 2026, HELOC borrowers could see their rates drop, making this an attractive entry point for those with short-term needs.
Need a streamlined process? Guaranteed Rate lets you check your HELOC eligibility and compare offers entirely online—making it a great starting point for anyone looking to run the numbers before committing.
And for those with less-than-ideal credit or irregular income, Point.com offers a unique path to unlock your equity without adding a monthly payment to your budget. It’s especially appealing if you're sitting on equity but want to avoid the risks of rising variable rates or repayment pressure in an uncertain economy.
Tax Advantages
If you're using the funds to renovate or improve your home, the interest on your HELOC could be tax-deductible—subject to IRS rules. That can further reduce your effective borrowing cost, especially if you're itemizing deductions. Just keep in mind that Point’s model is different—it doesn't generate interest payments at all, so there's no deduction, but also no added monthly obligation.
Risks and Considerations
Still, there are very real risks to entering into a variable-rate borrowing product in a time of economic uncertainty. Should inflation worsen or the Fed delay rate cuts, your monthly payments could rise over time—especially once the draw period ends and full repayment begins. That “payment shock” has caught many off guard in the past, particularly in rising-rate environments.
And because your home is the collateral, defaulting on a HELOC has much steeper consequences than falling behind on a credit card. In the worst-case scenario, you could lose your property. For borrowers with tight budgets or unpredictable income, the alternative model offered by Point.com might feel safer—since there are no monthly payments at all. You repay when you sell or refinance, and the company shares in the home’s appreciation (or depreciation, if values fall).
Should You Get a HELOC Right Now?
If you have strong credit, stable income, and a clear use for the funds, a HELOC can still be one of the most cost-effective ways to borrow. The ability to draw only what you need, when you need it, remains a major plus.
But if you're nervous about variable rates, or your financial picture doesn't align with the typical underwriting process, Point.com offers a compelling alternative. You still unlock your equity, but you do it without taking on new monthly debt—a rare option in today's credit market.
In short, now can be a good time to access your home equity. But how you do it matters just as much as when. Compare your options, run the numbers, and choose the strategy that fits your financial life—not just the current headlines.
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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