Small Interest Rate Changes

Small Interest Rate Changes Can Have a Big Impact

If you're considering a home equity loan for remodeling, debt consolidation, or other reasons, you may want to act sooner rather than later. Home equity loan rates U.S. interest rates have been at historic lows for years, but they won't remain there indefinitely. As the domestic economy improves, rate hikes are likely and the Federal Reserve has already signaled that they are considering increases.

change daily, and even small interest rate movements – a half point (.50%), for example–can impact monthly payments especially when the borrowed amount is significant and the repayment period is long. 

Here's a dollars and cents example of what this half-point rate differential can mean for consumers with a $50,000, 10-year home equity loan.

Home Equity Loan: $50,000

Loan maturity (years):
10 10 10 10 10 10
Interest rate: 3.8% 4.3% 4.8% 5.3% 5.8% 6.3%
Monthly payment: $501 $513 $525 $538 $550 $563

Total payments: $60,178 $61,606 $63,054


$66,011 $67,520
Total interest expense: $10,178 $11,606 $13,054 $14,523 $16,011 $17,519

Source:, rounded to the nearest dollar 

Rates vary among institutions, so take time to comparison shop before you apply. And why limit your shopping only to banks? Scope out credit unions for the possibility of more favorable rates. Check out the rates at Greater Texas.

Watch the video to learn more about small interest rate changes and how a credit union may be your best option for lending.