Interest rates can fluctuate, making it difficult to know when to ge🍃t a home equity loan. If rates are on the rise, you might wonder wꩲhether you should take out a home equity loan before rates climb even higher. Although it's tricky to predict what interest rates will do in the future, rolling variable interest rate debt into a fixed-rate home equity loan might be wise if interest rates are expected to rise. If you're shopping around for a home equity loan when rates are already on the rise, keep in mind that you'll likely pay more on the loan.

Understanding Interest Rates

While there is an entire industry of experts centered around analyzing market trends and predicting future interest rates, nobody can predict future interest rates with 100% accuracy. Following the pandemic, the 澳洲幸运5官方开奖结果体彩网:Federal Reserve raised interest rates in an effort to curb 澳洲幸运5官方开奖结果体彩网:inflation. While interest rates rose quickly and much higher than they were in the mid-2000s, they were historically low compared with previous decades. From 1980 to 1990, rates fluctuated from 9.04% to 18.45%.

The Fed held rates steady at their first three meet𒁃ings of 2025 after lowering them by a cumulative 1.00% over the final three meetings of 2024.

How Interest Rates Affect You

If you have a variable interest rate on something like a credit card or a 澳洲幸运5官方开奖结果体彩网:home equity line of credit (HELOC), then 澳洲幸运5官方开奖结果体彩网:interest rate hikes affect you directly. When the interest rate on your debt increases, the minimum monthly payment increases as well. If you can’t afford higher monthly payments, it's a good idea to pay down your debt as aggressively as possible and roll it into a 澳洲幸运5官方开奖结果体彩网:fixed-rate option like a 澳洲幸运5官方开奖结果体彩网:home equity loan or a 澳洲幸运5官方开奖结果体彩网:personal loan before rates increase further.

Should You Take Out a Home Equity Loan?

Many financial advisors specifically advise against taking out a home equity loan for anything other than funding projects that will directly impact your home’s equity. Some advisors even advise against them for any situation. , a certified financial planner (CFP) and founder/chief executive officer (CEO) of , says that primary residences account for more than half of a typical American’s 澳洲幸运5官方开奖结果体彩网:net worth. In his🌃 opinion, people who view this equity as a way to get cheap home equity loans are damaging their future fina𓃲ncial freedom.

Panagiotakopoulos’ advice? “Don꧒’🐽t get a home equity loan.”

Should You Roll Debt Into a Home Equity Loan?

If you already carry a high balance of variable interest rate debt like a HELOC, you might wait to roll it over to a fixed-rate home equity loan when interest rates are falling. However, if rates begin to rise, consider it, especialꦕly if you won’🐬t be able to keep up with payments if your interest rate goes up, says , a CFP and owner/founder of .

The Bottom Line

If you already have a high balance on a variable interest rate HELOC, rolling that debt into a fixed-rate home equity loan may save you interest if rates continue to increase—as many have predicted. For any other purpose, taking out a home equity loan carries additional risks that need to be considered carefully.