Home equity loan interest rate forecast for summer 2024: Everything experts predict

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While inflation slowed a bit in April , it's uncertain whether the Fed will lower rates in the near future, as predicted earlier this year, because the inflation rate is still higher than its target. As a result, the average interest rates being offered on lending products, from credit cards and personal loans, remain relatively high.

Fortunately, there are still some more affordable options for homeowners who need to borrow money: home equity loans and home equity lines of credit (HELOCs) . Both equity-tapping options still have much lower rates than many of the alternatives.

That said, interest rates can shift over time, and there's always a chance that home equity loan interest rates could change over time. But what will happen with home equity loan rates through summer 2024? Here's what the experts think.

Find out what today's best home equity loan options are here .

Home equity loan interest rate forecast for summer 2024: Everything experts predict

Here's what might happen to home equity loan rates this summer, according to experts we interviewed.

Home loan rates could remain flat

Dr. David Tuyo, CEO of University Credit Union and co-founder of the Advanced Lending Institute, a UCLA extension program, thinks home equity loan rates will most likely remain steady this summer.

According to Tuyo, rates might remain flat if the Fed takes a more measured approach to raising rates or if inflation cools down without requiring significant rate hikes.

Evan Luchaco, a home loan specialist with Churchill Mortgage, also believes rates will remain flat.

"With inflation readings coming in above the target 2% rate, we aren't likely to see rates come down in any significant way," says Luchaco. "Unless the new job creation numbers start coming in low and we start to see unemployment filings increase."

Due to those factors, Luchaco expects rates to hold steady, at least in the near term.

Compare the home equity borrowing rates you could qualify for now .

Home equity loan rates could increase

There's also a chance that home equity loan rates might rise if inflation ticks back up.

"If inflation picks up, then the Fed would be widely expected to raise rates to combat inflation with more extreme measures," says Tuyo.

And, if the Fed raises rates, Tuyo says it would likely push home equity loan rates higher, particularly for HELOCs , which are tied to the prime rate.

Mark Charnet, president and certified financial fiduciary at American Prosperity Group, also thinks rates could rise this summer.

"I believe that the Fed will raise rates in an effort to curb inflation, which is why I believe rates may increase in the short-term," says Charnet.

Home equity loan rates could drop

If the Fed cuts its benchmark rate, experts say you could expect home equity loan rates to fall .

"A Federal Reserve rate cut would certainly be a game-changer for interest rates, potentially bringing down the cost of borrowing on home equity loans," Tuyo says.

"The Fed has expressly stated they intend to follow the market data, so if the Fed lowers rates, it will be because of either inflation numbers decreasing or the employment market weakening—which will inevitably lead to lower rates," says Luchaco.

Is now a good time to lock in a home equity loan rate?

Taking out a home equity loan now rather than waiting could be a smart move, as home equity loan rates are fixed, and, in turn, remain the same throughout the life of the loan. After all, you can always refinance your home equity loan if rates drop in the future.

"Waiting for rates to fall is always a gamble. Locking in a rate gives you certainty," says Tuyo. "You know exactly what your monthly payment will be, which helps with budgeting and financial planning."

If you wait and home equity loan rates go up, though, you could be looking at significantly higher borrowing costs over the life of the loan.

Before committing to taking out a home equity loan, Tuyo recommends assessing your risk tolerance and comparing rates from multiple lenders to ensure you get the best deal for your financial situation.

The bottom line

No one can predict where home equity loan rates will head this summer with absolute certainty. "Ultimately, the future direction of rates depends on a complex interplay of factors, including Fed policy, economic conditions, and inflation," says Tuyo.

What is known is that locking in a home equity loan rate now can be beneficial because it protects against any future rate increases. For example, if the inflation trends upward and the Fed raises rates, home equity loan rates might rise, too.

"My advice to anyone planning on taking out a home equity loan is to talk to a loan officer to understand your options, lock in a competitive rate if that makes sense for you, and answer any questions you have," Tuyo says.