On January 18, 2026, home equity line of credit (HELOC) and home equity loan rates showed notable declines compared to the same period in 2025, signaling improved borrowing conditions for homeowners. The trend supports increased consumer spending and housing market momentum.
- HELOC rates fell to 7.8% in January 2026, down from 9.4% in January 2025
- Fixed home equity loan rates declined to 8.1% from 9.8% year-over-year
- Bank of America (BAC), JPMorgan (JPM), Citigroup (C), and Wells Fargo (WFC) stand to benefit from increased loan demand
- Home equity loan applications rose 18% month-over-month in January 2026
- XLF ETF gained 4.2% over the past month, reflecting sector optimism
- SPY rose 1.7% in the past week, driven by stronger consumer credit and housing trends
Home equity loan and HELOC rates have fallen significantly since early 2025, with average HELOC rates now at 7.8% as of January 18, 2026, down from 9.4% a year earlier. Similarly, fixed-rate home equity loans have declined to 8.1% from 9.8% in January 2025. These reductions reflect a broader easing in credit markets, driven by moderating inflation and preemptive rate cuts by the Federal Reserve in late 2025. The decline in borrowing costs is particularly beneficial for mortgage lenders and financial institutions such as Bank of America (BAC), JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC), which offer these products. Lower rates are expected to increase refinancing demand and spur home improvement projects, directly supporting consumer spending and construction activity. The S&P 500 Financials Sector ETF (XLF) has gained 4.2% over the past month, reflecting investor confidence in the sector’s improved loan volume outlook. Data indicates that homeowners with equity are increasingly tapping into their home values, with applications for home equity products rising 18% month-over-month in January. This uptick is especially pronounced in mid-market housing areas and among millennials and Gen X borrowers, who are leveraging lower rates for renovations, education expenses, and debt consolidation. The broader housing market is responding positively, with home prices in major metropolitan areas like Atlanta, Phoenix, and Denver showing a 2.1% quarterly increase. As consumer credit demand rises and lending margins stabilize, financial institutions are well-positioned to grow non-mortgage loan portfolios. The SPDR S&P 500 ETF (SPY) has also benefited, rising 1.7% over the past week amid optimism around consumer resilience.