Forecast: Home equity rates, the Fed and what’s next for home equity borrowing

The Federal Reserve just did something it hadn’t yet done in 2025: It lowered its benchmark overnight lending rate.

While the markets largely expected September’s quarter-point rate cut, it does mark the beginning of a potential easing cycle after months of holding rates steady. That matters for homeowners because the Fed’s decisions ripple through to home equity loan and HELOC rates, shaping how expensive (or affordable) it is to tap into the value of your home.

The natural questions now are: How much rate relief can home equity borrowers actually expect? And how might that impact the appetite for borrowing?

Fed tightening to improve home equity rates

If you’ve got a HELOC, you know that the Fed’s moves matter. HELOCs have variable rates tied directly to the prime rate, which typicall