HELOC Rate Cuts: How to Benefit from Federal Reserve Rate Reductions
Inflation and elevated interest rates are increasing borrowing costs and straining household budgets. Federal Reserve rate cuts could provide relief for homeowners with home equity lines of credit (HELOCs), which currently average 8.13% nationally. HELOC rates, linked to the prime rate plus a margin, can drop with Fed cuts, potentially saving $10-$15 monthly on a $50,000 balance. However, payment relief timing depends on adjustment schedules, billing cycles, and loan features like interest-only periods or payment caps. Borrowers should clarify their HELOC terms with lenders, including rate indices, margins, introductory rates, and rate caps. Proactive steps include budgeting for rate swings, maintaining principal payments, and considering refinancing to blend rates. Experts recommend reviewing HELOC terms and exploring fixed-rate loans to manage financial stress during rate volatility.