From Kiplinger · · 1m 20s
Home Equity Loans Get Costly as Rates Rise
Rising mortgage rates make home equity loans riskier for borrowers.
In brief
Rising mortgage rates make home equity loans riskier for borrowers. Homeowners face higher costs tapping home equity as interest rates climb. Originally reported by Kiplinger.
Home Equity Value Soars
Homeowners amass record $35.8 trillion in home equity this year, a 2.2% increase from 2025 and almost quadruple the 2012 level.
Homeowners Tap Equity for Needs
Homeowners use home equity to finance property upgrades, pay off high-interest debt, fund college, or cover living expenses.
HELOCs and Cash-Out Refis Rise
More than 1 million Americans borrowed against home equity in first half of 2026, the highest first-half level since 2022.
Interest Rates Surge
Fed rate hikes have made home equity loans more expensive, with primary and secondary mortgages now in the 7% to 8.5% range.
Experts Recommend Strategy
Choose a loan that fits your needs: lump-sum for home equity loans, ongoing flexibility for HELOCs.
Rate Sensitivity Matters
Rate increases of one or two percentage points could squeeze budgets, making fixed-rate loans safer.
Plan Before Acting
Small adjustments like credit score improvements can save money on interest rates.
Shop for Best Rates
Rate variations of almost half a percentage point exist for borrowers with similar credit profiles.
What to remember
Homeowners face higher costs tapping home equity as interest rates climb.
