Using home equity to pay for home improvements is suddenly back in fashion —
and for once, the math actually supports it. The Federal Reserve left its
benchmark rate unchanged again last week, but home equity rates have quietly
kept sliding: the average HELOC now sits around 7.2%, touching its lowest
levels in years after peaking above 10% in early 2024. At the same time,
homeowners are sitting on record amounts of equity and living in the oldest
housing stock North America has ever had. Put those together and you get the
story of late 2026: the renovation money isn’t coming from savings anymore —
it’s coming out of the house itself.
Home equity borrowing is growing at its fastest pace in a decade
The numbers tell a clear story. HELOC balances in the US are growing at
roughly 13% a year — the fastest clip in about a decade — and the average
line of credit has passed $50,000, according to Experian’s latest study.
Fortune and Bankrate both put average HELOC rates in the 7.2–7.4% range as
of this week, with home equity loans slightly higher at around 8%.
In Canada, the same logic applies through a different door: HELOC rates
track the prime rate, which has followed the Bank of Canada’s cuts down,
and Canada’s renovation market index just tipped back into positive
territory this spring after two flat years.
Why now? Because homeowners are stuck — productively stuck. Around 72% say
they plan to stay in their current home for the foreseeable future, and
about 69% live in homes more than 20 years old. As we covered in
why old house maintenance costs are surging,
those aging homes generate repair bills that don’t wait for a better
economy. Meanwhile 77% of homeowners say they’re delaying projects or
cutting their scope. Cheap equity is the release valve between those two
pressures.
The math: 7% beats 20% — but it’s not free money
The case for a HELOC over other borrowing is straightforward. The average
credit card now charges over 20%. A personal loan for a borrower with good
credit typically lands in the low teens. A HELOC at roughly 7% is less than
half the cost of plastic — on a $15,000 roof repair (about the median
planned renovation spend in 2026), that’s a difference of thousands of
dollars in interest over a few years.
But the collateral is your house, and that changes the rules:
- Borrow for repairs that protect the home — roof, electrical, plumbing,
foundation, drainage. These stop damage that compounds, which is why
fixing usually beats replacing
in this market. - Save up for the nice-to-haves. A new patio can wait for cash; a
leaking roof can’t. - Mind the variable rate. Most HELOCs float. A 7.2% rate today can
drift up — budget the payment at a point or two higher than quoted. - Shop at least three lenders. Quoted HELOC rates this week span from
about 6% to well into double digits depending on credit and lender.
What it means for contractors
For service pros, cheaper equity is quietly restoring demand that
shrinking renovation budgets
took away. A homeowner who has been deferring a $15,000 project for two
years says yes faster when the financing costs 7% instead of 20%. Pros who
can speak credibly about payment options — without playing loan officer —
are winning jobs from budget-anxious clients who would otherwise wait
another season. Expect financed midsize projects — kitchen
and bathroom remodels,
roofing, HVAC replacements — to carry the second half of 2026.
The bottom line
Home equity is the cheapest it has been in years, houses are the oldest
they’ve ever been, and most owners aren’t moving. If you’ve been putting
off a repair that protects your home’s structure or systems, 2026’s rates
have made “fix it now” the financially defensible choice — as long as you
borrow for the right projects and leave room for rates to wiggle.
Ready to put that budget to work? Get matched with vetted local pros and
compare real quotes before you borrow a dollar.
