Fed keeps interest rates frozen: 3 home equity moves to make now

It wasn't unexpected, but it still wasn't exactly welcome news on Wednesday when the Federal Reserve announced an extended pause in interest rates, keeping the federal funds rate unchanged at a range between 4.25% and 4.50%. The pause was the second in as many Fed meetings so far in 2025 after the bank issued three consecutive cuts in the final months of 2024. Now, cuts will be delayed at least until the Fed meets again in May and likely even beyond that, should economic conditions remain where they currently are.

This pause in rate cuts will significantly impact borrowers, as a higher federal funds rate leads to higher rates on products ranging from mortgages to personal loans to credit cards. Two products, however, have seen rates fall in recent months, despite the inaction on rates. Both home equity loan and home equity line of credit (HELOC) interest rates have steadily declined over the last year, making either a smart way to borrow a large amount of money right now.

A pause, however, offers homeowners an opportunity to more closely evaluate their home equity borrowing options. And that extends to making three timely but important moves now. Below, we'll break down the next steps.

Start by seeing how low of a home equity loan rate you'd currently qualify for here.

3 home equity moves to make with interest rates frozen

Here are three moves homeowners may want to consider making now, if home equity borrowing is a top consideration:

Compare home equity loans to HELOCs

A pause in interest rate movement – in either direction – gives homeowners considering their home equity an opportunity to take a breath and closely compare both their home equity loan and HELOC options. And while both operate similarly, they are not the same product and, accordingly, should be utilized in different ways. 

A HELOC works like a revolving line of credit similar to a credit card but it has a variable interest rate that will change monthly for borrowers (but, right now, HELOC rates are significantly lower than home equity loan rates). Home equity loans, on the other hand, have fixed interest rates which can be reliable and offer security in the face of unpredictability in the interest rate climate. And you could always refinance to a lower, fixed rate in the future if they materialize. So compare each to better understand which offers more advantages for your financial situation both now and over the long term.

Compare HELOCs and home equity loans online today.

Calculate your repayment costs

Because rates in the home equity borrowing space seem somewhat steady now, it could be an ideal time to calculate your repayment costs with a bit more clarity. Because your home functions as the collateral in this scenario, it's critical that you can comfortably afford your repayments. So calculate those repayment costs tied to both 10- and 15-year repayment periods for both home equity loans and HELOCs. And adjust rates in your calculations to account for potential cuts and hikes in the future to not only determine affordability now but over time.

Boost your credit profile

Remember that the rates you see on lender websites and marketplaces are generally the lowest ones reserved for borrowers with the highest credit scores and cleanest credit profiles. So if you don't have both, use this lull in rate activity to work on them. That means refraining from additional credit applications, paying down debt and reviewing your credit report for errors or inaccuracies. Anything you can do to reduce your debt-to-income ratio can also help. It can take time to get your credit in a strong enough position to secure low rates and attractive terms so it makes sense to start this process sooner rather than later.

The bottom line

A break in Fed rate activity should be used strategically by prospective home equity borrowers. By comparing home equity loans and HELOCs, precisely calculating your repayment costs and improving your credit score and profile, you can better set yourself up for home equity borrowing success both this year and well into the future.

Learn more about your HELOC and home equity loan options here.