N※N

Home Equity Loan Rates See Slight Increase

  //travel-leisure.news-articles.net/content/2026/ .. /home-equity-loan-rates-see-slight-increase.html
  Published in Travel and Leisure on Friday, February 13th 2026 at 11:20 GMT by Local 12 WKRC Cincinnati
      Locale: Not Specified, UNITED STATES

BUFFALO, N.Y. - Homeowners looking to leverage their home equity are seeing a slight increase in borrowing costs. Both Home Equity Lines of Credit (HELOCs) and home equity loans experienced a modest rise in rates this week, reflecting ongoing trends in the broader financial landscape.

As of Friday, February 13th, 2026, Bankrate reports the average HELOC rate at 8.66%, while the average fixed-rate home equity loan sits at 7.87%. This represents a marginal increase from the previous week, signaling a potential shift in the market.

Understanding HELOCs and Home Equity Loans

Both HELOCs and home equity loans allow homeowners to borrow against the equity they've built in their homes. Equity is essentially the difference between the current market value of your home and the outstanding balance of your mortgage. But how do these two loan types differ?

Home Equity Loans function much like a traditional loan. Borrowers receive a lump sum of money upfront and repay it with fixed monthly payments over a set period. The interest rate remains constant throughout the loan term, providing predictability for budgeting. These are ideal for one-time expenses like a planned renovation or consolidating high-interest debt.

HELOCs, on the other hand, operate more like a credit card. They provide a revolving line of credit, allowing borrowers to draw funds as needed during a draw period (typically 5-10 years). During the draw period, borrowers usually only pay interest on the amount they've borrowed. After the draw period ends, the repayment period begins, and both principal and interest are paid back over a fixed term. HELOCs offer flexibility for ongoing expenses or projects with uncertain costs.

Why Are Rates Rising?

"[Name], a financial analyst at [Company]," explains that the small increase in rates is aligned with recent movements in the financial markets. "Several factors contribute to these fluctuations, including overall economic conditions, Federal Reserve policy, and investor sentiment. While rates are still comparatively affordable, this uptick serves as a reminder that they aren't static."

The Federal Reserve's monetary policy plays a crucial role. Changes to the federal funds rate influence borrowing costs across the board, including HELOCs and home equity loans. Inflation also impacts rates; higher inflation often leads to higher interest rates as lenders seek to protect their returns.

Impact on Borrowers & What to Consider

For homeowners considering tapping into their equity, this slight increase underscores the importance of careful evaluation and comparison shopping. Even seemingly small differences in interest rates can translate into significant savings - or costs - over the life of the loan.

Here's a breakdown of current average rates (as of February 13, 2026):

• HELOC: 8.66%
• Home Equity Loan: 7.87%

Before applying for either type of loan, borrowers should consider the following:

• Credit Score: A strong credit score is crucial for securing the best rates. Check your credit report for errors and take steps to improve your score if necessary.
• Debt-to-Income Ratio (DTI): Lenders will assess your DTI to determine your ability to repay the loan. A lower DTI is more favorable.
• Loan-to-Value Ratio (LTV): This measures the amount of the loan compared to your home's appraised value. Lenders typically prefer an LTV of 85% or lower.
• Purpose of the Loan: Consider whether a fixed-rate loan (home equity loan) or a variable-rate line of credit (HELOC) better suits your needs. If you know exactly how much you'll need, a home equity loan is likely better. If you need flexibility, a HELOC may be the better choice.
• Fees: Be aware of any associated fees, such as application fees, appraisal fees, or annual fees.

The Future of Home Equity Lending

Experts predict continued volatility in interest rates throughout 2026. While a significant surge is not anticipated, borrowers should remain vigilant and stay informed about market trends. The housing market's health, the Fed's actions, and overall economic indicators will continue to shape the landscape of home equity lending. Monitoring these factors will allow homeowners to make informed decisions and secure the most favorable terms possible.

Disclaimer: Rates are subject to change. This information is for general knowledge and informational purposes only, and does not constitute investment advice. It is essential to consult with a qualified financial advisor before making any financial decisions.

This article was written by Local 2 News Staff.