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Talking Home Equity Lending Rates in CNET

November 23, 2023


Why are HELOC rates still hovering near 10 percent, despite diminished demand, CNET recently asked, and what should borrowers consider instead?

Hometap's Head of Investor Product Dan Burnett tells contributor Katherine Watt that lenders for lines of credit remain more conservative, as some outstanding questions remain about the extended future of Fed policy on interest rates. The products, he added, also tend to lag short-term changes in policy due to their construction, and typically sit on bank balance sheets for longer duration.

"Part of what’s driven HELOC rates up recently is the uncertainty around how long the Fed will keep rates elevated and whether another rate hike is coming down the pike, according to Dan Burnett, head of investor product at Hometap Equity Partners," she writes.

"HELOC rates have risen significantly over the past year. At the start of November, they breached the 10% mark, according to data from CNET sister site Bankrate. HELOC rates fluctuate based on market conditions, and rise and fall alongside the prime rate, which tracks changes to federal funds rate set by the Federal Reserve. The Fed has been aggressively increasing its federal funds rate since early 2022 to calm inflation. Though the central bank decided to keep interest rates steady during its most recent policy meeting, it likely won’t cut rates before inflation levels out."

More on the state of play at CNET Money.