Home Equity Borrowers Face Rising Rate Risk as Fed Hike Odds Build

Average U.S. home equity line of credit (HELOC) rates held at 7.25% on June 6, 2026, while fixed-rate home equity loans stood at 7.86%, according to Curinos. Both remain near their 2026 lows, but the window for favorable borrowing may be closing. CME Group’s FedWatch tool showed a 33.8% probability of a rate increase by the September meeting, climbing to 47.8% by December. HELOC rates, typically tied to the 6.75% prime rate plus a margin, would rise in tandem with Fed tightening. Lenders are dangling introductory offers, such as FourLeaf Credit Union’s 5.99% APR for 12 months, but those convert to variable rates thereafter. A $50,000 draw at 7.25% would cost about $302 monthly during the 10-year draw period before payments step up over a 20-year repayment term. Consumers with low primary mortgage rates are tapping home equity as a workaround to avoid refinancing near 6% mortgage rates.