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Homeowners who elected to borrow equity via a home equity line of credit (HELOC) saw their monthly payments decline for much of 2024 as HELOC interest rates tumbled throughout the year. Starting over 10% in January 2024, HELOC rates declined to around 8.70% by November. That was a big help for homeowners, thanks to the variable rate that HELOCs utilize. Since rates on the product change monthly, that directly led to some homeowners saving on their monthly costs.
But those reductions didn’t stop in 2024. HELOC rates fell to an 18-month low in January and then to a two-year low in February. Now, at just 8.12%, HELOCs are poised to drop below the 8% range sometime soon. But will they do so this March? Or will those trends reverse this month? Below, we’ll break down what both existing HELOC borrowers and prospective ones should consider about HELOC interest rates this month.
Start by seeing how low of a HELOC rate you’d be eligible for here.
Will HELOC interest rates keep falling this March?
While it’s impossible to predict with precision, HELOC interest rates could fall this March or they could remain relatively stagnant. Much of this direction will be determined on March 12. That’s when the Bureau of Labor Statistics will release its latest inflation reading, this time for February 2025.
Inflation increased in October, November, December and January — and a fifth consecutive hike there would be unwelcome news for borrowers. A rising inflation rate, after all, tends to lead to stagnation in regard to the federal funds rate. And consistently rising inflation could theoretically cause Fed rates to spike again. So that inflation reading will go a long way toward determining what, if anything, the Federal Reserve does in its next monetary meeting on March 18 and 19.
While most economists don’t expect a rate cut to be issued there, hints at future action one way or another could impact the HELOC rates lenders offer to both existing borrowers and future ones. If the Fed implies that higher rates will remain elevated for longer, today’s HELOC rates may not change materially, or they could rise slightly. But if the Fed starts a conversation about future rate cuts, HELOC rates could respond in a downward fashion. Home equity lenders don’t need to formally wait for formal Fed action to adjust their offers, though. So, if rate cuts look imminent after the March meeting, they may start reducing their HELOC rates preemptively.
In short, HELOC rates are likely to remain around the same point at the end of March that the month started at. Then again, many borrowers may have assumed there’d be no major adjustments in January and February, as HELOCs fell to recent lows. It makes sense to monitor HELOC rates daily, then, especially this month with a new inflation reading and Fed meeting on the schedule, for a window of opportunity to capitalize.
Start shopping for HELOCs online now.
The bottom line
Predicting the future of interest rates is always something that should be approached cautiously, particularly when doing so with a variable rate product that utilizes your existing home equity like a HELOC. Still, HELOC rates are already low and could potentially drop even further this March. So if you’re looking for an inexpensive way to borrow a large amount of money and are comfortable utilizing your home as collateral, this month could be a smart time to get started with a HELOC.
