Home equity lines of credit (HELOCs) are a popular way to borrow money against the equity in your home. They offer a low-interest rate and flexible repayment terms, making them a good option for a variety of borrowing needs.
However, HELOC rates are variable, which means they can change over time. This can make it difficult to budget for your HELOC payments, especially if rates rise.
So, what’s the outlook for HELOC rates in 2024? According to financial analysts, there is a possibility of a downward trend in HELOC rates throughout the year.
The Forecast for HELOC Rates 2024
The forecast for HELOC rates in 2024 suggests a potential decrease, which could be spurred by various economic factors, including policy changes by the Federal Reserve.
For instance, Bankrate’s chief financial analyst, Greg McBride, anticipates that HELOC rates could average around 8.45 percent by the end of the year, a drop from the previous average of 10.12 percent.
This projection is based on the expectation of the Federal Reserve cutting rates, which typically influences the rates of adjustable-rate loans like HELOCs.
Moreover, the economic growth and declining mortgage rates may contribute to more competitive introductory rate offers on HELOCs, leading to a more substantial decrease in the average HELOC rate than what would result from Federal Reserve rate cuts alone.
It’s also worth noting that the most creditworthy borrowers are likely to secure the best HELOC rates, which could be significantly lower than the overall average.
Factors that will affect HELOC rates in 2024
Several factors will affect HELOC rates in 2024, including:
The Federal Reserve’s interest rate policy
The Federal Reserve (Fed) is the central bank of the United States. It sets interest rates, which affect the cost of borrowing money. The Fed has been raising interest rates in an effort to combat inflation. This has led to an increase in HELOC rates. However, the Fed is expected to pause its rate hikes in 2024. This could lead to a decrease in HELOC rates.
The economy
The economy is another factor that will affect HELOC rates in 2024. A strong economy typically leads to higher interest rates, while a weak economy typically leads to lower interest rates. The US economy is expected to grow in 2024, but at a slower pace than in 2023. This could lead to a modest increase in HELOC rates.
The housing market
The housing market is also a factor that will affect HELOC rates in 2024. A strong housing market typically leads to higher HELOC rates, while a weak housing market typically leads to lower HELOC rates. The housing market is expected to remain strong in 2024, but it is expected to cool slightly from 2023. This could lead to a modest increase in HELOC rates.
Overall, the outlook for HELOC rates in 2024 is mixed. The Fed is expected to pause its rate hikes, which could lead to a decrease in HELOC rates. However, the economy and the housing market are expected to remain strong, which could lead to a modest increase in HELOC rates.
Here are some additional factors to consider when thinking about HELOC rates in 2024:
- Your credit score: Your credit score is a major factor in determining the interest rate you will get on a HELOC. The higher your credit score, the lower your interest rate will be.
- The amount of equity you have in your home: The amount of equity you have in your home will also affect the interest rate you get on a HELOC. The more equity you have, the lower your interest rate will be.
- The loan-to-value ratio (LTV): The LTV is the ratio of the amount you borrow to the value of your home. The higher the LTV, the higher your interest rate will be.
If you are considering getting a HELOC, it is important to compare rates from multiple lenders to get the best deal. You should also consider your individual circumstances, such as your credit score, the amount of equity you have in your home, and your LTV.
ALSO READ:
