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Home-Equity Loan Rates Rise

Banks are continuing to tighten lending standards and limits.

Interest rates on home-equity loans have risen across the board over the past week as banks continue to tighten lending standards and limits, expecting further losses amid a weak housing market.

Though rates vary widely across different markets, the average U.S. rate for a home-equity loan on Wednesday ranged from 7.14% for a three-year term to 7.7% for a 15-year term.

As home values have dropped across most of the U.S. and an increasing number of borrowers have missed mortgage payments, banks have made it more difficult and expensive to get a home-equity loan. Major lenders, like

Washington Mutual

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Bank of America

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, also have cut billions of dollars worth of credit lines that were available to homeowners.

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Regionally, rates are mirroring the effect of home prices. For instance, the National Association of Realtors says that prices fell hardest in the West during the first quarter, dragged down by heavy exposure to subprime mortgages. Rates for home-equity loans in the West are now the highest in the country and have increased the most over the past week overall.

Here are the states with the biggest rate increases for five-year home-equity loans over the past week, along with those that have the best rates. Keep in mind that rates in metropolitan areas can vary widely from the statewide average. For instance, the average rate in San Francisco is 8.11%, far lower than the overall California rate of 8.64%. Local banks and credit unions often have lower rates than major banks.

Biggest increases:

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8.42%, up from 7.71%.


7.3%, up from 7.01%.


8.58%, up from 8.3%.

New York:

8.39%, up from 8.12%.


8.11%, up from 7.85%

Lowest rates:


6.36%, unchanged.


6.61%, down from 6.62%.


6.95%, unchanged.


7.04%, unchanged.


7.07%, down from 7.1%.