Should you refinance your home equity loan this summer? Here's when it may make sense
Do you have a home equity loan? If so, you may be waiting for the optimal time to refinance it. And, if you took your loan out late last year when home equity loan rates averaged above 9%, you may hope that time comes soon.
While home equity loan interest rates have fallen since late 2023, they may have more room to drop. Recent economic reports suggest that the Federal Reserve could cut its federal funds rate later this year, and rates on home equity loans could fall if that happens.
But even if there's no change made to the federal funds rate, other factors could help spur interest rate reductions. And, there are a few dates you should pay attention to in particular if you want to refinance your home equity loan this summer.
Find out what home equity loan refinance rates you could qualify for now.
Should you refinance your home equity loan this summer? Here's when it may make sense
Here are a few dates that could be important in terms of home equity loan refinancing this summer:
July 1 and August 1
The Intercontinental Exchange (ICE) Mortgage Monitor report is typically released on the first business day of each month, which means July 1 and August 1 are upcoming dates to pay attention to. But why is the ICE Mortgage Monitor important if you're refinancing your home equity loan?
One reason is that the ICE Mortgage Monitor typically includes data showing how much home equity the average American homeowner has. That could matter if the goal of refinancing your home equity loan is to tap into more of your equity. The ICE Mortgage Monitor also outlines property value trends, which may also be important to those borrowing more from their equity when refinancing.
Learn how much home equity you can tap into when you refinance your loan today.
July 31
The next Fed meeting is scheduled for July 30 and July 31, and that meeting can have a profound impact on home equity rates, even if the Fed decides to keep the federal funds rate elevated. That's because something as simple as a comment from the Fed suggesting that future rate cuts are on the horizon could cause home equity rates to fall.
"The Fed might acknowledge inflation is trending downwards, which could cause rates to preemptively come down," says Alex Blackwood, CEO and co-founder of Mogul Club, an alternative investment platform focused on real estate.
So, if you're looking for the best home equity loan refinance rate this summer, it may benefit you to pay attention to the Federal Reserve's comments and the market changes that occur at or near the time of its next meeting.
August 14 and September 11
As inflation cools, the Fed becomes more likely to cut rates. And, inflation has been cooling, so some experts expect the first rate cut to happen in September.
That said, any evidence that the rate cut is likely to happen could also lead home equity rates to fall, so it makes sense to pay attention to the dates for the release of the upcoming inflation reports. Two inflation reports are slated to be released between the Fed's July and September meetings: one on August 14 and one on September 11.
If these reports show that inflation is cooling further, there could be a subsequent drop in home equity rates. So, both dates may be good times to consider refinancing your home equity loan.
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The bottom line
If you're interested in refinancing your home equity loan, the dates above could be important to pay attention to, whether your goal is to tap into more of your home's equity by refinancing or are refinancing to get a lower rate on your home equity loan. After all, the inflation reports and the Fed decisions can both have an impact on home equity loan rates — and the ICE mortgage data may tell you whether home equity levels have increased.
