Fed cut reduces $40,000 HELOC monthly cost
Average HELOC rates have fallen below 8% — Bankrate reports 7.88% after the Fed’s September rate cut — and CBS estimates a $40,000 HELOC at that rate would cost about $482.78/month on a 10-year amortization or $379.49/month on a 15-year plan (vs. $487.85/$385.04 earlier in 2025 at 8.12% and $505.41/$404.28 last fall at 8.94%). Many HELOCs also allow interest‑only payments during a draw period to lower monthly outlays, and markets still expect further Fed cuts (CME probabilities: Oct. 29 ≈85.5%, Dec. 10 ≈61.7%) as U.S. home equity hits a record $17.8 trillion.
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HELOC interest rates just fell below 8%. Here's why it's worth opening one this fall.
New information:
- Bankrate reports the average HELOC rate dropped to 7.88% (a 17 basis‑point fall in one week).
- CME Group FedWatch probabilities for Fed rate cuts at the Oct. 29 and Dec. 10 meetings: 85.5% and 61.7%, respectively.
- Cumulative U.S. home equity rose to a record $17.8 trillion (August report) and average homeowner equity cited as over $300,000.
How much will a $40,000 HELOC cost per month after the Fed interest rate cut?
New information:
- CBS News used a $40,000 HELOC and current average HELOC rates to compute payments: at 7.88% a 10-year payment is $482.78/month and a 15-year payment is $379.49/month.
- Comparative figures: earlier in 2025 at 8.12% the 10- and 15-year payments would have been $487.85 and $385.04; last fall at 8.94% they would have been $505.41 and $404.28.
- Article notes many HELOCs allow interest-only payments during a draw period (often up to 10 years), which would lower monthly outlays; it ties the change to the Fed’s September rate cut and expectations for further cuts in October/December 2025.