Latest news with #borrowing
CBS News
8 hours ago
- Business
- CBS News
$200,000 home equity loan vs. $200,000 HELOC: Which is less expensive now?
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. Before borrowing hundreds of thousands of dollars worth of home equity, owners should calculate their potential repayment costs. Getty Images/iStockphoto The average home equity level has been consistently rising in recent years, and according to recent reports, it has remained at a steadily high level. The cumulative home equity level in the United States hit a record high of $17.6 trillion in the first quarter of 2025, based on a report released earlier in June. The average homeowner, meanwhile, has over $300,000 worth of equity that they can borrow from with a home equity loan or home equity line of credit (HELOC). Accounting for the 20% equity threshold many lenders prefer borrowers maintain in their home at all times, that still leaves more than $200,000 worth of equity to utilize right now. And with inflation stubborn, if significantly cooled, interest rates still high and economic concerns broad now, this could be one of the better ways to borrow a large, six-figure sum of money. To ensure borrowing success, however, which is critical when utilizing your home as the funding source, you should first calculate your potential repayment costs. Failure to pay here could result in your home being foreclosed on. So you'll want to know exactly what you'll pay long term. And with rates on home equity loans and HELOCs different, both in how high they are and how they're structured, it's particularly important to compare the potential costs of both before getting started. But which is less expensive now: a $200,000 home equity loan or a $200,000 HELOC? That's what we'll examine below. Start by seeing how much home equity you could potentially borrow here. $200,000 home equity loan vs. $200,000 HELOC: Which is less expensive now? In June 2025, the repayment costs of a home equity loan and HELOC, no matter the amount borrowed, are essentially the same. With the median home equity loan rate at 8.25% and the average HELOC rate at 8.25%, you won't see a material difference in repayments right now. But that's this month, not long-term. Since home equity loan rates have fixed rates that won't change until refinanced and HELOCs have variable rates that change over time, this similarity is not likely to stay consistent. Here's what they would look like calculated against 10- and 15-year repayment periods now, assuming the HELOC rate remains unchanged: 10-year home equity loan at 8.25%: $2,453.05 per month $2,453.05 per month 15-year home equity loan at 8.25%: $1,940.28 per month 10-year HELOC at 8.27%: $2,455.18 per month $2,455.18 per month 15-year HELOC at 8.27%: $1,942.61 per month And here's how they would compare if HELOC rates decline by 25 basis points during this time: 10-year home equity loan at 8.25%: $2,453.05 per month $2,453.05 per month 15-year home equity loan at 8.25%: $1,940.28 per month 10-year HELOC at 8.02%: $2,428.67 per month $2,428.67 per month 15-year HELOC at 8.02%: $1,913.61 per month And here's what they would look like if HELOC rates rise by 25 basis points from today's averages: 10-year home equity loan at 8.25%: $2,453.05 per month $2,453.05 per month 15-year home equity loan at 8.25%: $1,940.28 per month 10-year HELOC at 8.52%: $2,481.85 per month $2,481.85 per month 15-year HELOC at 8.52%: $1,971.82 per month In short, a $200,000 home equity loan is marginally less expensive than a $200,000 HELOC is now. But that dynamic can and almost assuredly will change over a multiple-year repayment period. Borrowers will need to weigh those changes, then, against what they can lock in with a fixed home equity loan rate instead. And remember that home equity loans and HELOCs can always be refinanced in the future, should the rate climate or your borrowing needs change, so don't get too focused on long-term rate change scenarios, either. Compare your HELOC and home equity loan rate offers here to learn more. The bottom line $200,000 home equity loans and HELOCs come with similar payments now but they may not stay that way for very long, thanks to the latter's variable rate. That noted, HELOCs come with interest-only payment requirements for borrowers who want to utilize their equity that way during the draw period, so interest rates may be less of a concern than they'd be with a home equity loan which requires full monthly repayments immediately thanks to the disbursement of the funds in a single, lump sum. Compare both options carefully before getting started, then, to better ensure borrowing success both now and in the years to come.
The Guardian
16 hours ago
- Business
- The Guardian
UK borrowing rises to £17.7bn, adding to pressure on Rachel Reeves
Higher tax receipts were unable to prevent a rise in public sector borrowing in May to £17.7bn, up from £17bn a year earlier and the second highest for the month on record. A poll of City economists had forecast public sector net borrowing (PSNB) – the difference between public spending and income – would be £17.1bn. The figures will add to the concerns that the government is struggling to bring down the annual deficit to keep within strict spending rules. While last October's budget allowed for more than £100bn of extra investment spending, the chancellor, Rachel Reeves, said day-to-day Whitehall budgets must remain within strict limits. However, the measure of shortfall in day-to-day spending – the current budget deficit – remained below the forecast by the Office for Budget Responsibility (OBR), which provides independent forecasts of the public finances. Reeves has introduced extra taxes on businesses – including a rise in national insurance contributions – which were implemented in April. The OBR said it expected the current deficit to be £13bn in May, but it was £12.8bn, marking the second consecutive month when the deficit fell under the OBR prediction. Backbench Labour MPs are expected to rebel against cuts to benefits worth more than £5bn in the welfare bill introduced to parliament on Wednesday. Most major economic forecasters, including the International Monetary Fund and the Bank of England have downgraded the UK's growth prospects this year, potentially reducing tax receipts over the longer term and forcing the chancellor to make further spending cuts or raise taxes to bridge the gap. In March, the Office for Budget Responsibility said it expected borrowing to fall from £152bn in 2024-25 to £117.7bn in the 2025-26 financial year. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion However, the following month's deficit came in at £20.2bn, which was £1bn more than the same month a year earlier and higher than the £17.9bn economists predicted. April's borrowing was the fourth biggest on record, surpassing only deficits in April 2020 and 2021 during the height of the Covid pandemic, and in April 2012 linked to costs related to the privatisation of Royal Mail.
Telegraph
17 hours ago
- Business
- Telegraph
Treasury borrows more than expected despite rising tax revenues
The Treasury borrowed more than expected during the month of May, official figures show, despite increasing receipts from Rachel Reeves's tax raid. Public sector net borrowing was £17.7bn last month, which was £600m higher than the £17.1bn that had been forecast by the Office for Budget Responsibility. It was also £700m higher than May last year despite Rachel Reeves's Budget tax raid aimed at shoring up the nation's finances. The rise comes despite central government's tax receipts hitting £82.5bn in May, which was £5.3bn more than in the same month last year. Darren Jones, the Chief Secretary to the Treasury, insisted the latest borrowing figures showed the Government has 'stabilised the economy and the public finances'. Treasury borrowing was higher than OBR forecasts in May but was better than expected during the first two months of the financial year. Public sector borrowing was reached £37.7bn in April and May, which was £1.6bn more than the same period last year but £2.9bn less than the £40.7bn forecast by the OBR. Darren Jones said: 'Since taking office, we have taken the right decisions to protect working people, begin repairing the NHS, and fix the foundations to rebuild Britain. We stabilised the economy and the public finances; now we need to ensure that the British economy delivers for working people. 'Last week's Spending Review showed how we are investing in the UK's security, health, and the economy through our Plan for Change, so that people are better off.'
BBC News
17 hours ago
- Business
- BBC News
'Dismal' month for supermarkets pushes down retail sales
UK retail sales fell sharply last month after "dismal" sales at supermarkets, the UK's statistics body has volumes are estimated to have fallen by 2.7% in May, the biggest monthly fall since December 2023, according to the Office for National Statistics (ONS).It said there were signs that alcohol and tobacco sales were lower after customers chose to make figures from the ONS showed that government borrowing rose last month, hitting the second highest level for May since monthly began in 1993. Borrowing - the difference between spending and tax income - was £17.7bn, up £0.7bn from May last ONS said revenue from income tax and National Insurance contributions increased, but spending rose by more, partly due to inflation-linked uplifts to many benefits.
Reuters
17 hours ago
- Business
- Reuters
UK public finances show 17.7 billion-pound deficit in May
LONDON, June 20 (Reuters) - Britain's government borrowed 17.686 billion pounds ($23.84 billion) in May, official data showed on Friday. A Reuters poll of economists showed a median forecast of 17.1 billion pounds for public sector net borrowing. ($1 = 0.7447 pounds)
