Will home equity rates fall below 8% in 2024? Experts weigh in


If the economy continues to improve in 2024 then rates on home equity loans may drop below 8%.

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After a volatile couple of years following the COVID-19 outbreak, the economy is beginning to show signs of stabilization. 

The inflation rate is fluctuating between 3% and 4%, down from 9.1% in 2022, and the Fed is suggesting that rate hikes are over for this cycle. Further, the median sale price of U.S. homes is settling in the $400,000 to $450,000 range, about $100,000 higher than the average in the first half of 2020. 

If you bought a home in or before 2020, you’re likely sitting on quite a bit of new equity. However, due to the series of rate hikes over the past two years, the interest rates on home-borrowing products like home equity loans and lines of credit (HELOCs) have been elevated. As of February 5th, 2023, the average home equity loan rate was 8.95% and the average HELOC rate was 9.27%. 

The good news is that rate decreases are likely on the horizon. Below, we’ll take a look at how far experts think home equity rates will drop in 2024 and if they think it’s a good year to tap into your equity. 

Start by checking the home equity loan interest rate you could qualify for here now.

Will home equity rates fall below 8% in 2024?

What home equity rates can you expect in 2024? Various experts agree that rates will likely fall below 8%, although it may not be until the second half of the year. 

“By their own estimates, through what is known as the ‘dot plot,’ the Federal Reserve project where they think rates will be in 2024. Currently, these indicators show a 0.75% decrease from their current levels. If this were accurate, rates would end up at 7.75% from its current 8.5% levels,” says Shmuel Shayowitz, president and chief lending officer at Approved Funding. 

However, Shayowitz thinks rates may end up even lower. “I believe that by the time 2024 comes to an end, The Fed will have decreased rates a lot more than the current 0.75% projections,” he says. “I think they won’t cut rates as quickly as they need to, which will mean they’ll need to be more aggressive later in the year.”

Vikram Gupta, the head of home equity at PNC Bank, also thinks that there’s a strong chance that home equity rates will drop in tandem with the prime rate in 2024. 

“Home equity rates are closely aligned with the prime rate, currently at 8.5%, which has been increasing over the last 18 months,” said Gupta, “Given the likelihood of a drop in the prime rate, there’s a strong chance that some customers, especially those with good credit, may be able to get home equity rates below 8% in 2024.”

Ebony J. Howard, a certified public accountant and freelance consultant, also predicts home equity rates will drop below 8% this year, but thinks it’ll likely be later in the year.

“The variable factor is economic growth performance, which is trending towards a more positive outlook, coupled with the Fed’s decision to ease up on further interest rate hikes,” said Howard. 

Start exploring your home equity loan rates and terms here today.

Should you apply for a home equity loan or HELOC in 2024?

With home values at record highs and experts predicting interest rate drops, 2024 can potentially be a good year to tap into your equity

“Homeowners would be smart to take advantage of the historical home appreciation and equity available to them, as well as the aggressive appetite of banks that are presently hungry to get new clients,” says Shayowitz. “As the economy softens, and the rapid rate of home appreciation softens, banks will change their tune.”

Howard also says it could be a good time to take out a home equity loan or HELOC and warns that you shouldn’t wait too long.

“I believe Americans who are considering tapping into their home equity should do so as rates begin to decline. However, they shouldn’t necessarily wait for rates to hit rock bottom. One factor to consider is that when interest rates decrease, home values are likely to follow suit, potentially resulting in less available equity compared to when rates were higher and demand was lower,” she said. 

While we may be entering a good window to take out home equity loans and HELOCs, the most important factor is your ability to afford the payments as your home will be on the line. “Before rushing into tapping into equity, ensure that you are financially capable of managing the equity loan,” says Howard. 



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