Rates on home equity products increased for the second straight week.

The average home equity line of credit, or HELOC, rose 5 basis points, to 5.3 percent. Meanwhile, home equity loan rates increased 2 basis points, to 8.21 percent -- the highest level since June 2002.

A basis point is one-hundredth of a percentage point.

HELOC rates have been dropping since the Federal Reserve started its latest rate-cutting campaign. Most home equity lines of credit are indexed to the prime rate, a common benchmark for consumer and business loans set by banks. The prime rate moves in lock step with the federal funds rate.

Although HELOC rates are declining, fewer homeowners are able to take advantage of reduced borrowing costs. Many lenders have been freezing HELOC borrowing as a result of declining home values and increasing levels of borrower default.

In other home equity news, federal authorities recently announced several arrests and convictions related to a HELOC swindle involving a global identity-theft ring.

As part of the scam, thieves allegedly tapped into thousands of HELOC accounts and wired $2.5 million to banks in countries outside the United States, according to a report in The Washington Post.

HELOC theft has become a growing problem in recent months.

-- Chris Kissell

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