HELOC Rates in 2026: Is Now the Right Time for Velocity Banking?
Current HELOC rates analysis and whether velocity banking still makes sense. Spoiler: yes, and here's exactly why.
HELOC rates have fluctuated significantly over the past few years. With rates currently in the 7-9% range, many homeowners wonder: "Does velocity banking still make sense?" The short answer is yes—and here's exactly why.
Current HELOC Rates in 2026
As of December 2025, HELOC rates are tied to the Prime Rate (currently around 7.5%). Rate ranges by credit score:
- Excellent Credit (760+): 7.5% - 8.0%
- Good Credit (700-759): 8.0% - 9.0%
- Fair Credit (660-699): 9.0% - 10.5%
- Below 660: May not qualify or 10.5%+
What Affects Your HELOC Rate
- Credit Score: A 760+ score can save you 1-2% compared to a 680 score
- Loan-to-Value Ratio: Lower LTV often means better rates
- Lender Type: Credit unions often offer 0.25-0.5% lower than big banks
- Draw Amount: Larger credit lines may get better rates
- Promotional Rates: Many lenders offer 6-12 month intro rates
Why Velocity Banking Still Works at 8%+
1. Simple Interest vs Compound Interest
HELOCs charge simple interest on your daily balance. Your income deposits immediately reduce the balance you're charged interest on.
2. Front-Loaded Amortization
On a 30-year mortgage at 7%, the first payment is 83% interest. A lump-sum principal payment in year 1 saves FAR more than the same payment in year 20.
3. Credit Card Rate Comparison
The average credit card rate in 2026 is 22-24%. Using an 8% HELOC to pay off credit card debt saves 14-16% annually.
Rate Comparison: HELOC vs Other Debt
| Debt Type | Average Rate 2026 | vs HELOC |
|---|---|---|
| HELOC | 7.5% - 9% | — |
| Credit Cards | 22% - 29% | HELOC saves 14-20% |
| Personal Loans | 11% - 18% | HELOC saves 3-9% |
| Auto Loans | 7% - 12% | HELOC saves 0-3% |
How to Get the Best HELOC Rate
- Shop Credit Unions First
- Improve Credit Score First (if under 760)
- Look for Promotional Rates
- Ask for Rate Match
- Set Up Autopay (often 0.25% discount)
- Bundle Products for relationship discounts
Should You Wait for Lower Rates?
The cost of waiting 12 months for rates to drop 1% often costs MORE than starting now. Plus, HELOCs have variable rates—they'll drop automatically when rates fall.
Bottom Line: Get the HELOC now, start velocity banking, and automatically benefit when rates fall.