Here's when home equity loan rates could fall again
Home equity loan interest rates are on the decline. Despite a slight uptick last week, both home equity loan and home equity line of credit (HELOC) interest rates have been on a steady decline all year. And they may not have hit their bottom point quite yet — or even come close to it.
HELOCs, for example, have dropped more than 1.50 points since January, the most recent reduction coming after the Federal Reserve issued a 25 basis point cut to the federal funds rate last week. That followed a larger-than-anticipated 50 basis point reduction in September, the first such cut to come from the Fed in more than four years. As such, interest rates on a variety of borrowing products have started to decline and are likely to continue to do so in the weeks and months to come.
But when, specifically, will home equity loan rates fall again? It's impossible to predict with certainty but there are some notable calendar dates in which they may decline. Below, we'll detail three of them.
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Here's when home equity loan rates could fall again
While predicting the future movement of interest rates comes with multiple, inherent risks, prospective home equity borrowers (and current ones looking to refinance), should monitor the following dates specifically for an opportunity to act:
November 13, 2024
If you thought interest rates would remain static after last week's Fed rate cut, you'd be mistaken. With the next inflation reading (for October) to be released on November 13, rates could drop (or rise) in response. A report that shows inflation fell again in October could be an indicator of additional rate cuts to come, even if another cut is weeks away. Remember that lenders don't need to wait for the Fed to take formal action to start offering lower-rate offers to borrowers. A drop in inflation, then, could be the motivation they need to take action.
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December 6, 2024
The first Friday of a new month is when the Bureau of Labor Statistics releases its latest unemployment numbers. If unemployment remains low, then the chances of an additional rate cut designed to spark economic activity wane. But if unemployment looks unsteady, as it did in the most recent report when just 12,000 jobs were added, it could motivate the Fed to issue another rate cut. Lenders are well aware of this dynamic and may adjust their home equity loan offers accordingly. So watch this date (and the days in the week after) closely.
December 18, 2024
Conjecture over the next Fed rate cut will come to an end when the Fed concludes its final 2024 meeting on December 18. Depending on what happened with the aforementioned factors, rates can and likely will fall again on this date. Borrowers should understand, however, that if unemployment and inflation already affected lender offers before this meeting, any formal rate action that comes out of it is unlikely to have a dramatic effect (unless, of course, the Fed issues another larger-than-anticipated cut).
The bottom line
There's a lot that goes into the consideration lenders make about interest rates, particularly for home equity loan users who put up their homes as collateral in these exchanges. But with multiple, pivotal factors at play in the days and weeks ahead, there's a good chance home equity loan rates can and will fall again. Borrowers understanding these dynamics, then, should boost their credit score now and get their documentation in order in advance to capitalize on a lower rate offer if it does materialize.
