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HELOCs (home equity lines of credit) used to be widely available at prime rate. That changed when the credit crisis inflated funding costs and drove up rates as high as prime + 1.50% and up.
Now, five years after the financial system was seemingly on the verge of collapse, we’re finally seeing HELOC pricing near prime rate.
Case in point is B2B Bank. Today it chopped its HELOC rate to prime + 0.25%. That equals the lowest nationally available non-promotional HELOC rate in years.
By comparison:
- Most national lenders are currently at prime + 0.50%
- Uncompetitive national lenders are at prime + 1.00% and up
- CIBC has a short-term introductory rate of prime (but it only applies for 9 months; then it increases)
- National Bank has prime rate for engineers
- A few regional credit unions are at prime + 0.25%
B2B’s pricing improvement isn’t just a one-bank story. It is symbolically important. It signifies that funding costs (spreads) on higher-risk financing are almost back to “normal.”
It also shows that the HELOC market is getting increasingly competitive, which leaves us optimistic that we’ll someday see prime rate on HELOCs once again.
4 Comments
Their site says prime + 0.5
Prime + 0.25% is a special broker rate.
Any follow up on this? I see a # of lenders are now offering HELOCs at prime. how low can they go??
We’re not aware of any major and/or national lenders offering prime rate on a HELOC for the general public.
That said, some banks and brokers can do HELOCs at prime for certain professionals, like doctors and engineers.
There are also a few small credit unions offering prime rate to their members (Rocky CU and Ontario Educational CU).