First mortgages for primary residences typically range from 6.5% to 8.5% as of mid-2024, while second mortgages (e.g., home equity lines of credit or HELOCs) average 8.0% to 10.0%. Fixed-rate loans for primary homes are slightly lower than variable-rate or jumbo loans, and second mortgages generally carry higher rates due to increased lender risk.

The disparity in interest rates stems from risk assessment and market dynamics. Primary mortgages are prioritized by lenders due to lower default risk, as they are secured by the primary residence, which is often more valuable and less likely to be abandoned. According to the Mortgage Bankers Association (MBA), 30-year fixed-rate mortgages averaged 7.25% in June 2024, down from 7.75% in early 2024, reflecting easing inflation and cautious Fed rate hikes. Conversely, HELOCs, which are variable-rate loans, averaged 8.5% in the same period, per data from the National Association of Home Equity Lenders (NAHEL). Second mortgages also face higher costs because lenders require larger equity contributions (often 20%) and shorter terms, increasing administrative and default risks. The Federal Reserve’s 2024 rate cuts have further compressed primary mortgage rates, while secondary loans remain elevated due to their subordinate position in the property’s debt hierarchy. For example, a $300,000 primary mortgage at 7.25% costs $1,965 monthly, whereas a $150,000 HELOC at 8.5% costs $1,295 monthly, highlighting the rate premium for secondary financing. These trends align with broader economic indicators, such as the 10-year Treasury yield averaging 4.8% in 2024, which directly influences mortgage pricing. Ultimately, the gap between first and second mortgage rates reflects risk mitigation strategies and market supply-demand conditions for home equity financing.