Exploring essential details about home equity loans as June approaches
Homeowners contemplating a home equity loan should weigh several factors, both timeless and timely, before making a decision. Failure to repay the loan could potentially lead to foreclosure, a consideration of utmost importance. As for more current concerns, the intended use of proceeds and interest rates, along with broader economic factors, are crucial.
With inflation readings slated for release on June 11 and a Federal Reserve meeting scheduled for June 17-18, emerging economic trends might further influence home equity borrowing in the coming months. Prospective borrowers would be wise to begin their research now, starting with an understanding of key home equity loan aspects in June 2025. Below, we highlight three such aspects.
First and foremost, home equity loan interest rates have witnessed a gradual decline over the past year, dipping to a 2025 low of 8.23% in May – a decrease of 57 basis points since February 2024. While this may seem minor, the savings over time can be substantial given typical 10 and 15-year repayment terms. If inflation continues to decline and additional interest rate cuts are on the horizon, rates could drop further. Nevertheless, if immediate financing is needed, it may be prudent to secure today's low, fixed rate and consider refinancing if future drops are significant.
Second, home equity loans are generally more affordable than unsecured loan types due to the home serving as collateral. This difference has become particularly pronounced in recent months. The average credit card interest rate, for instance, is close to a record 23%, while personal loan interest rates are edging toward 13%. Even rates on home equity lines of credit (HELOCs), previously the least expensive borrowing option, have increased in the past weeks. Unlike home equity loans, HELOC rates are variable and may fluctuate after funding. In light of this, home equity loans could be one of the most affordable and secure borrowing choices going into June.
Lastly, the average home equity amount remains substantial, offering most homeowners a six-figure sum to potentially leverage. While specific loan amounts for June 2025 are not yet available, typical home equity loan and HELOC amounts range from $25,000 to over $150,000, depending on the lender and the borrower's home equity. Caution should be exercised to avoid overborrowing, as it could potentially jeopardize home ownership if repayment becomes challenging.
In conclusion, a home equity loan could present an opportunity to borrow a significant amount of money this June, given the current interest rate climate and high average home equity amounts. However, care must be taken to assess repayment costs both in the short term and over the full repayment period to ensure long-term affordability before committing to the loan.
Matt Richardson is the senior managing editor for the Managing Your Money section for ourNews.com. He focuses on producing content about personal finance, ranging from savings and investing to insurance.
[1] https://www.bankrate.com/mortgages/average-conforming-conventional-30-year-fixed-mortgage-rate/[2] https://www.bankrate.com/mortgages/reverse-mortgages/average-reverse-mortgage-rate/[3] https://www.bankrate.com/mortgages/reverse-mortgages/best-reverse-mortgage-rates/[4] https://www.bankrate.com/mortgages/average-conforming-30-year-fixed-mortgage-rates/[5] https://www.nerdwallet.com/research/mortgages/heloc-loan-rates
- In the news surrounding personal finance, Matt Richardson, the senior managing editor for the Managing Your Money section of ourNews.com, sheds light on home equity loans and their potential benefits, emphasizing the current low interest rates and high average home equity amounts as factors to consider in June 2025. (Home equity loan, news, finance)
- Amidst discussions on loan options and their associated interest rates, home equity loans are highlighted as more affordable than unsecured loan types due to the home serving as collateral. This affordability is especially noticeable in comparison to credit card interest rates, currently close to a record 23%, and personal loan interest rates edging toward 13%. (Home equity loan, finance, lifestyle)
- As homeowners weigh the decision of a home equity loan, the climate of climate news and broader economic factors play a significant role, with inflation readings slated for release on June 11 and a Federal Reserve meeting scheduled for June 17-18 potentially impacting home equity borrowing trends in the coming months. (Climate, news, finance)
