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A $25,000 personal loan or credit card limit may be relatively easy to secure, but the current interest rates that both come with make borrowing with these products cost-prohibitive now. The average personal loan interest rate is around 12% now, while the median credit card rate is 21%, just under a recent record high. Borrowing a five-figure amount of money with either one, then, will be costly, even for borrowers with good credit scores and clean credit history.
If you’re a homeowner, however, borrowing this amount with a home equity loan makes a lot of sense in today’s economy, especially after the Federal Reserve just issued another interest rate cut in the final days of October. Home equity loan rates are averaging in the low 8% range now, making them almost three times more affordable than a credit card. And home equity levels are robust, hitting a record high earlier this year. So, borrowing a relatively small amount like $25,000, when the average homeowner has around $300,000 to leverage, is relatively simple to get approved for.
Still, your home is collateral in these exchanges, so it’s critical that you calculate the repayment costs here with precision to avoid jeopardizing your homeownership. Fortunately, costs have come down this year thanks to the Fed’s rate-cut campaign. But how much does a $25,000 home equity loan cost monthly now, after the October Fed rate cut, exactly? Below, we’ll complete the calculations.
Start by seeing how much home equity you’d be eligible to borrow here.
How much does a $25,000 home equity loan cost monthly after the October Fed rate cut?
Calculating the monthly payments on a home equity loan is simple, thanks to the fixed interest rate the product comes with. In other words, what you pay in month one will be the same for the entirety of the loan unless you decide to refinance. Here’s what a $25,000 home equity loan will cost qualified borrowers monthly now, calculated against average rates and common repayment periods:
- 10-year home equity loan at 8.20%: $305.97 per month
- 15-year home equity loan at 8.15%: $241.08 per month
For context, here’s what a home equity loan of this amount cost in September, when the Fed cut rates in that month:
- 10-year home equity loan at 8.43%: $309.03 per month
- 15-year home equity loan at 8.31%: $243.41 per month
And here’s how much more expensive it would have been if secured in February, before the Fed issued any 2025 interest rate cuts:
- 10-year home equity loan at 8.57%: $310.90 per month
- 15-year home equity loan at 8.52%: $246.48 per month
While rates and costs here are only down about $5 per month for either option compared to earlier in 2025, the downward trend is an encouraging one for borrowers. That adds up to $60 per year and between $600 and $900 over the life of the loans.Â
See how low your home equity loan rate offers are here now.
Is a HELOC the better way to borrow home equity now?
If you’re a homeowner looking for an even cheaper way to borrow home equity now, a home equity line of credit (HELOC) may be worth exploring. With an average rate of just 7.82%, HELOCs are considerably more affordable than home equity loans and are currently one of the cheapest ways to borrow money overall. And with a variable rate that changes each month based on market conditions, it can be a smart way to exploit additional interest rate cuts still to come. That said, variability will need to be factored in here and rates can and likely will rise over an extended repayment period. Weigh this likelihood against the home equity loan’s higher, but fixed, interest rate to better determine which makes more sense for your budget both now and over the long term.
The bottom line
Post-October Fed rate cut, a $25,000 home equity loan costs between $241 and $306 each month if secured now. But with rate cuts possible as soon as the Fed’s next meeting in December, borrowers will need to weigh the benefits of a slightly higher (fixed) home equity loan rate now versus what can potentially be secured in the months ahead with a responsive, cooler (variable) HELOC interest rate. There’s no uniform answer for each borrower so take the time to compare both closely and consider speaking with a home equity lender who can answer your questions and help you better determine your next steps.
Angelica Leicht
