HELOC Rates Today, December 28, 2025: The Equity-Tapping Advantage of 2026
As 2025 draws to a close, a rare and advantageous window is opening up for millions of American homeowners. With home equity levels still near historic highs and interest rates continuing their modest decline, a Home Equity Line of Credit, or HELOC, is becoming the go-to financial tool for those looking to tap into their property’s value without touching their low-rate first mortgage.
The national average HELOC rate today sits around **7.63% to 7.81%**, depending on the source and the borrower’s profile. This is an important data point because it represents a significant dip from the highs seen in the previous year, a direct result of the Federal Reserve’s gradual easing of its benchmark rate. Since HELOC rates are typically variable and tied to the Prime Rate, which is hovering around **7.00%**, this downward trend is creating a more attractive borrowing environment.
The 2026 Outlook: More Equity, Lower Rates
Why is this moment so significant? The general forecast for 2026 points to two key trends that are highly favorable for equity borrowing. First, housing experts predict a stable year for home values, with modest national growth projected between **1.2% and 4%**. This means the considerable equity homeowners have accumulated is not expected to suddenly disappear, but rather solidify or even grow slightly, maintaining a strong base for new borrowing.
Second, interest rate forecasts suggest that the current momentum will continue, with the Prime Rate potentially dropping further into 2026. While no one can predict the future with certainty, the expectation of continued rate cuts suggests that homeowners who open a HELOC now could see their borrowing costs trend down over the course of the next year, thanks to the variable nature of the product. This makes the HELOC particularly appealing over a fixed-rate home equity loan.
HELOC: Your Financial Swiss Army Knife
For homeowners who secured a primary mortgage at rock-bottom rates years ago, the HELOC offers crucial flexibility. Unlike a cash-out refinance, which would mean trading a sub-4% or 5% mortgage for a new, higher rate on the entire balance, a HELOC leaves your primary mortgage untouched. You only borrow what you need, when you need it, and only pay interest on the money you actually use.
Common uses for the funds include: major **home renovations** (kitchen, bathroom, or a new addition), which can increase the value of your home; **debt consolidation** to pay off high-interest credit cards; or simply setting up an **emergency fund** that is available but costs nothing unless you draw from it.
A Crucial Tax Consideration for the New Year
A key point for 2026 is the potential shift in tax law. Currently, through the end of 2025, the interest paid on a HELOC is only tax-deductible if the funds are used to **buy, build, or substantially improve** the home that secures the loan. However, this restriction, which was part of the 2017 Tax Cuts and Jobs Act, is scheduled to expire at the end of the 2025 tax year. Unless Congress intervenes, the rules for loans taken out in 2026 may revert to the pre-2018 standard, which generally allowed a deduction for interest on up to $100,000 of home equity debt, regardless of how the money was used.
This potential reversion to a more expansive deduction makes a HELOC in early 2026 an especially attractive tool for a wider range of financial goals, a fact savvy homeowners will want to discuss with their financial advisor right away.
