Home Equity Loan Rates Hit 7.86 Percent as Homeowners Tap Equity to Cover Costs

Average fixed-rate home equity loan rates reached 7.86 percent by mid-June 2026, according to data from Yahoo Finance. The rate increase has not stopped homeowners from borrowing against their equity, as many look for ways to manage rising costs without selling their homes.

Home equity has grown substantially for many American homeowners over the past several years, driven by rising property values. Even as mortgage rates have climbed, the equity cushion built up during the pandemic-era housing boom has given many owners a financial resource to draw on.

Financial advisors said the decision to tap home equity at current rates requires careful consideration. At 7.86 percent, a home equity loan is cheaper than most credit cards but more expensive than the low-rate mortgages many homeowners locked in during 2020 and 2021.

Common uses for home equity borrowing include home renovations, debt consolidation, and covering large unexpected expenses. Some homeowners are also using equity loans to fund college tuition or help adult children with down payments.

The 30-year fixed mortgage rate averaged 6.92 percent as of late May 2026, according to Experian. That rate has pushed more buyers toward adjustable-rate mortgages, which now account for nearly 10 percent of new mortgage applications.

Housing economists said the combination of high rates and limited inventory continues to squeeze affordability. First-time buyers face particular challenges, as the monthly payment on a median-priced home has increased by hundreds of dollars compared to three years ago.