Rates for both fixed rate home equity loans and variable rate home equity lines of credit increased this week. The average home equity loan rate jumped to 6.79 percent while the average home equity line of credit rose to a 4-month high of 5.53 percent.
According to a recent report by Freddie Mac, the net amount of home equity converted to cash as part of a refinance reached its lowest level in 16 years during the third quarter. This is a direct result of the plunge in home prices that has erased the equity of millions of homeowners. In contrast to the years of the housing boom, when borrowers were taking cash out of the home through refinancing, borrowers are now increasingly putting cash in to facilitate refinancing.
But, for long time homeowners that have accumulated a significant equity stake, the cost of borrowing against that equity remains compelling. Variable rate home equity lines of credit can be found at low single digit interest rates and with the Federal Reserve pledging to keep short term interest rates on hold until at least mid-2013, home equity borrowers can enjoy those low rates for a couple of years.
To find the best rates on home equity loans and lines of credit ... visit Bankrate.com. I'm Kristin Arnold.