The average rates for both 10- and 15-year home equity loans each increased around 20 basis points from the week previous, according to CNET’s sister site Bankrate. In recent weeks, home equity loan rates have been bumping up and down in the 8% range. However, home equity loans tend to have fixed interest rates, meaning those with existing home equity loans won’t see any changes to their monthly payments. Interest rates for home equity loans track the Fed’s federal funds rate, so homeowners looking to borrow with a home equity loan could see some rate increases in response to this week’s meeting. “So, if inflation isn’t under control, they’re going to take stronger action and that’s what would result in higher rates,” he added. “Ultimately, I think will be driven by the pace of inflation because that’s what the Fed is trying to control by raising rates,” Cook said. Instead, the central bank may opt to hold rates at an elevated position as it waits to see the cumulative effect on inflation. Inflation has been steadily decreasing each month this year and the Fed has signaled that ongoing rate increases may no longer be necessary to bring down inflation. In addition, this may be the last rate hike we see from the central bank for a while. “So may not change things much unless there’s a surprise in inflation data.” “What’s already factored into the market is an expectation of a certain pace of rate increases,” said Rob Cook, vice president of marketing, digital and analytics for Discover Home Loans. However, the most recent Fed rate hike may not have a huge impact on interest rates for home equity loans. But, this week’s Federal Reserve meeting could make it more expensive to do so.ĭuring its May meeting, the Federal Reserve announced a 25-basis point (or 0.25%) increase to its benchmark federal funds rate. Homeowners in need of cash may be able to leverage their property’s equity with a home equity loan.
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