What type of interest rate is typically associated with HELOCs?

The type of interest rate typically associated with Home Equity Lines of Credit (HELOCs) is indeed floating rates, which are also known as variable rates. In a HELOC, the interest rate is adjustable and often tied to a benchmark rate, such as the prime rate. As this benchmark rate fluctuates, so does the interest rate on the HELOC, which means borrowers could see their rates increase or decrease over time based on current market conditions.

This characteristic of floating rates allows borrowers to potentially benefit from lower rates when the benchmark is low, but it also introduces some level of risk since payments could increase if interest rates rise. Overall, this variable structure is a key feature that differentiates HELOCs from other types of loans that may have fixed or predetermined interest rates for the duration of the loan term.