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HELOC Rates in 2023: What to Expect and How to Take Advantage of Lower Interest Rates.


May 9, 2023



If you are looking to tap into the equity of your home to fund a renovation, pay off debt or cover any other expenses, then you may be considering a Home Equity Line of Credit (HELOC). One of the most important factors to consider when applying for a HELOC is the interest rate, which can have a significant impact on the overall cost of borrowing.

Fortunately, there is good news for those planning to take out a HELOC in 2023. Experts predict that HELOC rates are likely to decrease next year, making it an ideal time to secure a line of credit. In this article, we'll explore why HELOC rates are likely to go down in 2023, what factors can affect your HELOC interest rate, and how you can take advantage of these lower rates.

Why are HELOC Rates Expected to Go Down in 2023?


HELOC rates are tied to the Federal Reserve's interest rate policies. The Federal Reserve sets the benchmark interest rate, known as the federal funds rate, which impacts the interest rates of all loans, including HELOCs. In response to the economic downturn caused by the COVID-19 pandemic, the Federal Reserve reduced interest rates to near-zero levels in 2020. These low-interest rates are expected to continue in 2022 and into 2023, which will likely lead to a decrease in HELOC rates.

Additionally, competition among lenders can also drive down HELOC rates. As more financial institutions offer HELOCs, they may compete by offering lower interest rates, which can benefit consumers.

Factors That Affect HELOC Interest Rates


While overall market conditions and competition among lenders can affect HELOC rates, several individual factors can also impact your interest rate, including:

  • Credit Score: A higher credit score can lead to a lower interest rate on your HELOC. Lenders view borrowers with good credit as less of a risk, which can translate to a lower interest rate.

  • Loan-to-Value Ratio: The loan-to-value (LTV) ratio is the percentage of your home's value that you want to borrow. If you have a higher LTV, you may be viewed as a higher risk borrower, which can result in a higher interest rate.

  • Debt-to-Income Ratio: Your debt-to-income (DTI) ratio is the amount of debt you have compared to your income. If you have a high DTI, you may be viewed as a riskier borrower, which can lead to a higher interest rate.

  • Location: HELOC rates can vary based on where you live, as state laws and regulations can impact the interest rate.

How to Take Advantage of Lower HELOC Rates in 2023

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If you are considering taking out a HELOC in 2023, there are several steps you can take to ensure you get the best interest rate:

1. Improve your credit score: Pay your bills on time and keep your credit card balances low to improve your credit score.

2. Maintain a low LTV: If you plan to take out a HELOC, make sure you have a low LTV ratio. The lower your LTV, the more favorable your interest rate is likely to be.

3. Reduce your debt-to-income ratio: Pay off any outstanding debts and increase your income to reduce your DTI ratio.

4. Shop around: Compare HELOC rates from multiple lenders to ensure you get the best deal.


HELOC rates are expected to decrease in 2023 due to the Federal Reserve's low-interest rate policies and increased competition among lenders. By understanding the factors that affect your HELOC interest rate and taking steps to improve your credit score, reduce your debt-to-income ratio, and shop around for the best rates, you can take advantage of these lower rates and secure a cost-effective line of credit.

Get a Quote from Hitch Today!

Ready to unlock the value in your home and make smart financial decisions? Get a quote from Hitch today and experience the benefits of our digital HELOC platform. Our streamlined process, personalized approach, and commitment to your financial health make us the ideal choice for your home equity needs. Don't wait, take control of your finances with Hitch!

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Equal Housing Lender

Hitch, Inc. NMLS #2383367 #2383367

2158 NW Toussaint Drive. Bend, Oregon 97703

1. Qualified applicants may borrow up to 95% of their home’s value. This does not apply to investment properties.

2. HELOCs have a 10-year draw period. During the draw period, the borrower is required to make monthly minimum payments, which will equal the greater of (a) $100; or (b) the total of all accrued finance charges and other charges for the monthly billing cycle. During the draw period, the monthly minimum payments may not reduce the outstanding principal balance. During the repayment period, the borrower is required to make monthly minimum payments, which will equal the greater of (a) $100; or (b) 1/240th of the outstanding balance at the end of the draw period, plus all accrued finance charges and other fees, charges, and costs.The lender will calculate this amount by taking the outstanding Account Balance on the last day of the draw period and dividing it by 240 months and then adding any finance charge that accrues but remains unpaid during the monthly billing cycle plus any other fees, charges and costs to the fixed principal payment that is due. During the repayment period, the monthly minimum payments may not, to the extent permitted by law, fully repay the principal balance outstanding on the HELOC. At the end of the repayment period, the borrower must pay any remaining outstanding balance in one full payment.

3. The time it takes to get cash is measured from the time the Lending Partner receives all documents requested from the applicant and assumes the applicant’s stated income, property and title information provided in the loan application matches the requested documents and any supporting information. Most borrowers get their cash on average in 21 days. The time period calculation to get cash is based on the first 4 months of 2024 loan funding's, assumes the funds are wired, excludes weekends, and excludes the government-mandated disclosure waiting period. The amount of time it takes to get cash will vary depending on the applicant’s respective financial circumstances and the Lending Partner’s current volume of applications. Closing costs can vary from 3.0 - 5.0%. An appraisal may be required to be completed on the property in some instances.

4. Not all borrowers will meet the requirements necessary to qualify. Rates and terms are subject to change based on market conditions and borrower eligibility. This offer is subject to verification of borrower qualifications, property evaluations, income verification and credit approval. This is not a commitment to lend.

5. The content provided is presented for information purposes only. This is not a commitment to lend or extend credit. Information and/or dates are subject to change without notice. All loans are subject to credit approval. Other restrictions may apply.