Report on Home Equity Loans and HELOCs: Emphasizing Sustainable Development Goals (SDGs) in Summer 2025

Introduction

As of mid-2025, the average home equity held by homeowners is approximately $300,000 and continues to rise. This financial asset presents an opportunity for homeowners to access substantial funds at interest rates significantly lower than those available through personal loans or credit cards. Home equity loans and home equity lines of credit (HELOCs) are two primary financial products enabling such borrowing. This report analyzes these options with a focus on their affordability and implications within the framework of the United Nations Sustainable Development Goals (SDGs), particularly SDG 1 (No Poverty), SDG 8 (Decent Work and Economic Growth), and SDG 11 (Sustainable Cities and Communities).

Understanding Home Equity Loans and HELOCs

• Home Equity Loan: A fixed-rate loan secured by the home, providing a lump sum amount.
• HELOC: A variable-rate line of credit secured by the home, allowing flexible borrowing up to a credit limit.

Both products enable homeowners to leverage their home equity at affordable interest rates, contributing to financial inclusion and economic empowerment aligned with SDG 8.

Interest Rate Trends and Federal Reserve Influence

As of June 2025, interest rates for home equity loans and HELOCs are approximately 8.25% and 8.27%, respectively. The Federal Reserve’s upcoming meetings, particularly the high probability (85%) of an interest rate cut in September 2025, are expected to influence these rates further.

1. Home equity loan rates are fixed, offering rate security but less flexibility.
2. HELOC rates are variable, potentially decreasing with Federal Reserve rate cuts.

This dynamic affects long-term affordability and financial planning for homeowners, which is critical for sustainable economic growth (SDG 8) and reducing financial vulnerability (SDG 1).

Comparative Analysis: Cost-Effectiveness of HELOCs vs. Home Equity Loans

• Home Equity Loans: May be cheaper if secured before rate cuts due to fixed rates.
• HELOCs: Could become more affordable post-rate cuts due to variable rates.

Homeowners must evaluate the timing of borrowing and their risk tolerance, considering the collateral risk of foreclosure if repayments are not met, which impacts SDG 11 by influencing housing stability.

Recommendations for Homeowners

1. Assess current interest rates and potential Federal Reserve actions before borrowing.
2. Consider fixed-rate home equity loans for rate security in uncertain markets.
3. Monitor HELOC rate fluctuations to capitalize on potential future reductions.
4. Plan repayment strategies carefully to avoid foreclosure risks, supporting sustainable communities (SDG 11).

Implications for Sustainable Development Goals

• SDG 1 – No Poverty: Access to affordable credit through home equity products can prevent financial distress and reduce poverty risks.
• SDG 8 – Decent Work and Economic Growth: Responsible borrowing supports economic stability and growth by enabling investment in education, health, or business.
• SDG 11 – Sustainable Cities and Communities: Maintaining homeownership through manageable debt contributes to sustainable urban development and community stability.

Conclusion

With interest rates for home equity loans and HELOCs currently similar and expected to be influenced by Federal Reserve policies, homeowners face a nuanced decision. Fixed-rate home equity loans provide immediate rate security, while variable-rate HELOCs offer potential savings if rates decline. Careful consideration of these factors, aligned with the principles of sustainable development, can enable homeowners to make informed borrowing decisions that support their financial well-being and contribute to broader SDG objectives.

Author

Matt Richardson, Senior Managing Editor, Managing Your Money, CBSNews.com. Expertise in personal finance including savings, investing, and insurance.

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 1: No Poverty – The article discusses home equity loans and HELOCs as financial tools that can help homeowners access funds at affordable rates, potentially preventing financial distress.
• SDG 8: Decent Work and Economic Growth – By providing insights into borrowing options and interest rates, the article supports economic stability and growth through informed financial decisions.
• SDG 10: Reduced Inequalities – Access to affordable credit can help reduce financial inequalities among homeowners by enabling better borrowing conditions.
• SDG 11: Sustainable Cities and Communities – Homeownership and access to affordable loans contribute to stable and sustainable communities.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. SDG 1 – Target 1.4: Ensure that all men and women have equal rights to economic resources, including access to basic services and ownership of property.
2. SDG 8 – Target 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance, and financial services for all.
3. SDG 10 – Target 10.2: Empower and promote the social, economic, and political inclusion of all, irrespective of economic status.
4. SDG 11 – Target 11.1: Ensure access for all to adequate, safe, and affordable housing and basic services.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Indicator for Target 1.4: Proportion of population living in households with access to affordable credit facilities such as home equity loans and HELOCs.
• Indicator for Target 8.10: Number and volume of loans issued by financial institutions at affordable interest rates.
• Indicator for Target 10.2: Percentage of homeowners able to access credit products with favorable terms compared to personal loans or credit cards.
• Indicator for Target 11.1: Rate of homeownership sustained through affordable financing options and reduced foreclosure rates.

4. Table: SDGs, Targets and Indicators

Source: cbsnews.com