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Even with cooler inflation, the Federal Reserve has kept interest rates steady through the first half of 2025. This cautious approach has left homeowners wondering when borrowing relief might come, particularly with the Fed’s June meeting right around the corner.
Will policymakers signal future rate cuts or continue to hold the line? This question looms large if you’re considering a home equity loan or home equity line of credit (HELOC). While Fed decisions don’t directly control these rates, they do influence the broader interest rate environment that affects your borrowing costs. We asked mortgage analysts and lending professionals what homeowners can expect from home equity rates after the June meeting. Below, we’ll examine their predictions.
Start by seeing how low of a home equity loan rate you’d currently qualify for here.
Will home equity rates fall after the June Fed meeting?
Industry professionals generally don’t expect a notable decline right after the June 18 Fed meeting.
“I don’t see home equity rates dropping much,” Steven Glick, director of mortgage sales at real estate investment fintech company HomeAbroad, says. The odds favor the Fed keeping rates unchanged this month, largely because inflation remains above the 2% target and the economy continues to hold up.
When rate changes do come, though, they won’t affect all home equity borrowing the same way.
Debbie Calixto, sales manager at mortgage lender loanDepot, explains that HELOCs are tied to the Prime Rate, which closely follows the Federal Reserve’s benchmark interest rate. “When the Fed lowers its rate, HELOC rates usually decrease by a corresponding amount,” she says.
Home equity loans, however, connect more to the bond market and broader economic conditions rather than the Fed’s interest rate. “While fluctuations are always possible, home equity loan rates will likely remain stable following the Fed’s June meeting,” predicts Calixto. “Barring any significant economic events, we can expect only minor movements in these rates [this] month.”
Looking beyond June, the picture improves. Glick sees better odds of a rate cut by fall — and if that happens, he expects home equity rates to ease modestly. Joe Perveiler, senior vice president and home lending executive at PNC Bank, also thinks rates will likely fall over the next six months. However, pinpointing exactly when is difficult.
See what HELOC rate you’d be eligible for here.
Key considerations when weighing home equity borrowing
Beyond keeping an eye on the Fed’s imminent move, experts say three practical factors should guide your home equity borrowing decision:
Understand your true purpose for borrowing
Glick emphasizes being crystal clear about why you need the money. “Using equity for home improvements that add value or to pay off high-interest credit card debt makes sense,” he says. “But using it for vacations or risky investments … you’re putting your home on the line.”
Debt consolidation represents one of the strongest cases for home equity borrowing. “If [you’re] looking to consolidate debt, today’s home equity rates are still substantially lower than average credit card or personal loan rates,” Perveiler points out. “It’s an excellent option to save on interest costs and lower [your] monthly payments.”
Know your home sale timeline and long-term goals
Besides interest rates, timing matters. “If you plan to sell within the next few years, drawing down your available equity now could limit your flexibility and financial gain when it’s time to sell,” warns Calixto.
She also stresses considering how accessing your home equity fits into your big-picture financial goals. “Will this decision delay retirement savings, college funding or other major milestones? Be sure the short-term advantages don’t come at the expense of long-term financial health,” she adds.
Ensure you can handle the payments
Dean Rathbun, executive vice president of United American Mortgage Corporation, encourages asking yourself: “Do I need these funds, and do I have a plan to pay off this debt in the foreseeable future?”
HELOCs come with a payment structure that trips up many borrowers. “The most common overlooked item is that the initial years of a HELOC are interest-only,” Rathbun explains. “By making the minimum interest-only payments, the balance remains the same. Try to make [more] principal paydowns as you go, so once the loan becomes fully amortizing, the payment won’t be as high.”
Calixto highlights the stakes involved. “While missing a credit card payment might damage your credit score, falling behind on a mortgage can have much more serious consequences, including foreclosure risk,” she cautions.
The bottom line
Instead of getting hung up on home equity loan interest rates alone, Glick advises focusing on your financial stability and what you’re trying to achieve. Remember that your home functions as collateral here, so thoughtful borrowing matters more than perfect timing. If you’re considering equity borrowing options now, speak with a couple of home lenders to compare rates and full terms. A credible one will help you determine if tapping your home’s equity matches your financial goals this June.
