HELOC Rates Offer Holiday Relief as Borrowing Costs Hit 2025 Lows
For homeowners looking to tap into their accumulated wealth to cover end-of-year expenses, the financial news this week is proving to be a welcome holiday gift. National average rates for a Home Equity Line of Credit, or HELOC, have settled near 7.63% as of December 21, marking a significant “rate break” and sitting at their lowest point of 2025.
This drop is music to the ears of homeowners preparing for the crush of holiday spending, or perhaps, for those with bigger plans like a post-New Year home renovation. A HELOC acts like a credit card secured by your home equity, allowing you to borrow only what you need, when you need it, during a set draw period. This makes it an especially flexible tool for cash flow management during the often-unpredictable high-spending season.
The Fed’s Gift to Homeowners
Why the sudden dip in borrowing costs? The answer lies with the Federal Reserve. The central bank recently wrapped up its final meeting of the year by delivering a widely anticipated 25-basis-point cut to the Federal Funds Rate. This move, which brings the Fed’s target range to 3.50% to 3.75%, was the third such cut in as many months, following similar adjustments in September and October 2025.
Since HELOC rates are typically variable and tied directly to the Prime Rate, which, in turn, is heavily influenced by the Fed’s actions, this series of rate cuts has caused home equity borrowing costs to fall dramatically. The current national average of 7.63% represents the lowest level seen in almost three years. For a qualified borrower, this is a stark improvement from earlier in 2025 when rates were hovering much higher.
Record Equity, Growing Opportunity
The favorable rate environment is colliding with another powerful market force: record-high home equity. Driven by years of housing value appreciation, American homeowners today hold close to a staggering $36 trillion in total equity. This record cushion is providing a solid foundation for those looking to leverage their property’s value.
It is important to remember that not all HELOC offers are the same. While the national average is a useful benchmark, individual rates depend heavily on your financial profile, including your credit score and your combined loan-to-value ratio (CLTV). Lenders view HELOCs as second mortgages, so strong borrower profiles are rewarded with the best rates. For example, some highly qualified homeowners are being quoted variable rates as low as 6.24% today.
Whether you are consolidating high-interest credit card debt, funding a college tuition payment due in the new year, or tackling a major home improvement project, the current environment presents a unique opportunity. Lenders are eager to put that record equity to work, and with the Federal Reserve signaling a more accommodating stance, shopping around for the best deal this December could translate into significant savings over the life of your line of credit. If you’ve been on the fence about accessing your home’s value, now may be the moment to take a closer look.
