What to know about home equity loans heading into June
Borrowing from your home equity with a home equity loan comes with a series of both timeless and timely considerations. In the first category, homeowners will need to carefully calculate affordability as they could lose their home in a foreclosure should they fail to repay their loan. In the latter category, however, the intended use of the home equity funds and the interest rate at which that money is secured become more prevalent concerns. Broader economic concerns can also impact your home equity borrowing process this spring, as items like inflation, the interest rate climate, and more all impact your decision-making.
And with a new inflation reading scheduled for release on June 11 and another Federal Reserve meeting to determine monetary policy (and interest rates) set for June 17 and June 18, new economic developments could further impact the home equity loan borrowing climate. Understanding this potential, then, prospective borrowers should start doing their research now. That starts with understanding some key items about home equity loans heading into June 2025. Below, we'll break down three of them.
Start by seeing how much home equity you could borrow with a loan here.
What to know about home equity loans heading into June
Here are three important items to know about home equity loans heading into June 2025:
Interest rates just fell to a 2025 low
Home equity loan interest rates have been on a slow but gradual decline for much of the last year. In February 2024, the average rate on a 5-year home equity loan was 8.80%, but it was just 8.23% at the end of May, falling to a new 2025 low, according to Bankrate data. That 57-basis-point drop may not seem like much on paper, but it can add up to substantial savings over time, particularly considering the common 10 and 15-year repayment periods. And should inflation continue to decline (it fell in February, March and April) and interest rate cuts are issued again (which looks likely for later this year), rates here will likely fall even further. Still, if you need a home equity loan now, it may make sense to lock in today's low rate (home equity loan rates are fixed) and then simply look to refinance if rates fall materially in the future.
Compare your current home equity loan rate offers online now.
They're one of the more affordable ways to borrow now
Partially because the home functions as collateral, home equity loans are generally one of the more affordable ways to borrow money, particularly when compared to unsecured loan types. But this difference has been stark in recent months. The average credit card interest rate, for example, is slightly below a record 23%. Personal loan interest rates, meanwhile, are cheaper but still closing in on 13% right now. Even rates on home equity lines of credit (HELOCs), which had been the clear, least expensive way to borrow, have been steadily increasing in recent weeks. And unlike home equity loans, HELOC rates are variable and subject to rise or fall after the funding has been applied for. So if you're looking for one of the most affordable (and safer) ways to borrow money going into June, a home equity loan could be one of your better options.
The average home equity amount remains high
The average home equity amount has declined a bit from where it was in 2024, when it sat around $327,000. But that decline hasn't been steep, with the average home equity amount now at $313,000, according to a March report. Even with many lenders requiring owners to maintain a 20% equity threshold in the home, that still leaves the median homeowner with a six-figure sum of money to withdraw from right now. So if you want to borrow $100,000 this June, for example, a home equity loan could be the smart way to do so. Just avoid the temptation to overborrow, too, as it could risk your homeownership if you're unable to maintain your repayment schedule.
The bottom line
This June could be a good time to borrow money with a home equity loan. With rates here declining and recently hitting a 2025 low, alternative borrowing options costlier and the average home equity amount giving homeowners a six-figure sum to potentially leverage, this could be the way to borrow a large amount of money now. Just be sure to carefully consider repayment costs both now and over the full repayment period to better gauge long-term affordability before formally applying.
