There are benefits to considering a fixed-rate HELOC in today's economic climate, but there are downsides, too.
There's no question that the current interest rate environment is vastly different than it was just a few years ago. With the Federal Reserve's benchmark rate paused at a 23-year high, today's borrowing rates are much higher. And, while mid-year Fed rate cuts were expected at one point, inflation has been ticking back up. So, it's unclear if or when those rate cuts will happen. However, one area where borrowing remains relatively affordable, and accessible, is home equity.
For example, the average personal loan rate hovers above 12% currently and the average credit card rate is now over 21%. This makes a fixed-rate HELOC a potentially more cost-effective choice in today's rate environment, especially if you're looking to borrow larger amounts of money.
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