Are fixed or variable home equity borrowing rates better this April?
If you've been looking for a way to borrow money at an affordable rate, you may be disappointed with your options. Even though inflation has dropped substantially from the approximate 9% range it was hovering near in June 2022, it's still problematic for many Americans. Now at 2.8%, it remains almost a full percentage point above the Federal Reserve's target 2% goal. That's caused the bank to leave interest rates high, causing borrowing rates to remain expensive for even those with good credit scores and clean credit backgrounds.
Amid this backdrop, and with interest rates in the double digits for items like credit cards and personal loans, homeowners may be considering borrowing their home equity. Home equity loans and home equity lines of credit (HELOCs) are both viable options worth exploring now. But they don't function identically, with the most obvious difference being the interest rate structure: home equity loans have fixed rates while HELOCs have variable ones. Either can be beneficial, depending on your goals and financial circumstances. But which will be better for prospective home equity borrowers heading into April? That's what we'll break down below.
Start comparing your HELOC and home equity loan rate offers here.
Are fixed or variable home equity loan rates better this April?
The answer to this question, as is the answer to so many personal financial questions, isn't a straightforward one. For some homeowners, a fixed rate can very easily be the preferred choice while others may find the variable HELOC rate advantageous.
HELOC rates have been declining for much of the last year. They fell throughout 2024, hit an 18-month low in 2025 and followed that by hitting multiple two-year lows in recent weeks. If that trend continues, a HELOC could become even more affordable for borrowers. Considering that rates change independently each month, and refinancing and refinancing closing costs won't come into play as they would with a home equity loan, this is a serious option for homeowners who can withstand some volatility in their rates. Add in the potential for HELOC rates to fall further in April, this is easily one of the most affordable ways to borrow money now (HELOC rates as of March 25 average 8.03% versus 8.37% for home equity loans).
On the other hand, home equity loan rates aren't that much more expensive. And the rate will be locked, meaning that any economic developments in April, May or beyond that may adversely impact HELOC rates won't change the home equity loan rate you lock in now. That's a major advantage in most economic climates, but especially now as the fight to tame inflation and lower interest rates across the board rages on.
Understanding this dynamic, and with the desire to avoid stress over a constantly evolving rate dynamic, many homeowners may find it easier to just lock in the slightly higher (but fixed) home equity loan rate this April. And, should rates fall materially in the future, simply explore refinancing options then.
To determine which makes the most sense for you this April, consider calculating your repayment costs against a series of rate scenarios: what's available now, what can realistically materialize in April and what rates on both products could be over the long term. This will help quell concerns prevalent in today's unusual rate climate and give you a better idea of long-term affordability, which is critical when borrowing from a vital financial asset like your home.
Learn more about your home equity borrowing options here.
The bottom line
Borrowing from your home equity is a personal decision that should be approached strategically and with caution. You don't want to lose your home to the lender if you can't make your payments and, to avoid that very real scenario, you'll need to determine if a fixed or variable home equity loan rate makes more sense for you this April and over the full repayment period. So crunch the numbers, be realistic about your ability to pay a variable rate and consider speaking to a home equity lender who can answer any questions you may have specific to your financial circumstances now.
