I'm Greg McBride, senior financial analyst with Bankrate.com and here is your weekly look at home equity rates.
While rates may be declining for first mortgages, its not the same story for home equity products. The average rate on a home equity line of credit moved higher for the second week in a row, to 5.42 percent. The average fixed rate home equity loan was also up for a second consecutive week, and now sits at 6.90 percent.
Why are these rates so much higher than the 2, 3, and 4 percent rates we're seeing on mortgages? That's the price of being 2nd in line to collect in the event of default. The higher rates reflect the added risk the lender is taking by lending against the equity and being the second lienholder on the property. A lot of home equity loans and lines of credit taken during the housing boom were complete losses when home prices plunged and borrowers defaulted.
The results are more stringent equity requirements and a bigger difference when compared to rates on first mortgages.
For more information on home equity loans and home equity lines of credit, and to check home loan rates in your area, go to Bankrate.com.
I'm Greg McBride.