The Federal Reserve's relentless rate-cutting hasn't made most types of consumer loans much, if any, cheaper.

Home equity lines of credit are the big exception.

Our latest survey of major lenders taken July 2 found that the average cost of a home equity line of credit, or HELOC, rose to 5.00% from 5.47%. But it remains at its lowest level since December 2004.

HELOCs could become even more affordable in the coming months, as they are tied to the prime rate (what banks charge their best customers for loans), which stands at 5%. But that could be as low as it gets because the Federal Reserve, which has been lowering short-interest rates since September, has now put rate cuts on hold -- and it's those rate cuts that lower the prime rate. In fact, there's evidence rates could start climbing early next year.

Current low rates should help lots of would-be borrowers who need money for home improvements or college tuition for the kids.

Be aware that HELOCs are usually variable-rate loans that could go up when the Fed begins raising rates again.

Our extensive database of the best rates on home equity lines of credit shows many lenders are now offering homeowners with good credit (FICO scores of 650 to 720 or better) rates at 5% or less.

Low rates mean that, right now, HELOCs are ideal for paying down high-cost credit card debt. Think of the savings you'll pocket by paying off 19%-or-higher debt with a loan of 5% or less.

Don't have high credit card debt? What about paying off your auto loan or having a line of credit available in these uncertain times, just in case? The suggested three-to-six-months' worth of income in a rainy-day account could buy you peace of mind.

Unfortunately, not every homeowner can get a HELOC.

Lenders have pretty much stopped making them in places where home values have fallen a lot, particularly in Florida, Arizona, California and Nevada. They've even frozen the accounts of more than 600,000 homeowners who already had lines of credit.

Other homeowners are simply tapped out, having already extracted most or all of the equity in their homes with previous loans.

For the first time since the Fed began keeping records in 1945, homeowners hold less than half of the equity in their homes. That means lenders now own more equity in our homes than we do.

With home prices falling in most cities, 8.8 million of us, or 10.3% of all homeowners, actually owe more than our homes are worth. That's more than twice as many as a year ago, according to Moody's Economy.com.

As a result, home equity borrowing fell to an annualized rate of $26 billion in the final three months of 2007, a far cry from the $180.5 billion we took out of our homes in 2004.

And according to Freddie Mac, the government-chartered company that buys loans from mortgage lenders, in the first quarter of 2008 only 56% of its refinanced loans were cash-out refis, which are refinances for at least 5% more than the balance due. That is a big drop from the second and third quarters of 2006, when 88% of all refinances were of the cash-out variety.

If you have good credit and substantial equity in your home, there are some good deals.

A line of credit allows you to use as much or as little of the loan as you'd like and to pay it back on your own terms. You need only pay interest on the amount you use or you can take money out and pay it back over and over again. If you don't use it, it costs you nothing.

To figure out how big a HELOC you can get, subtract the balance on your mortgage from what the home is worth. (You may need to get an appraisal.) Then multiply that number by 0.80 -â?? that represents 80% of your equity, which is what most lenders are willing to loan.

For example, if your house is worth $150,000 and you still owe $120,000, you'd have $30,000 in equity. Eighty percent of that would be $24,000, so that would be the most you could borrow.

The average cost of a traditional home equity loan jumped to 7.91% from 7.85%, according to Interest.com's most recent survey, and it is likely to remain in 7.9% range for the foreseeable future.

That's because a growing number of homeowners are defaulting on these loans, particularly ones used as piggyback loans to buy a house with little or no money down.

Some lenders have stopped making home equity loans altogether. Those that remain in the market are charging higher rates, particularly in states like California, Florida, Arizona and Nevada, which have the highest foreclosure rates.

Home equity loans also are less flexible than lines of credit. You must take all of the money up front and adhere to a rigid repayment program that requires you to make the same payment each month until the debt is retired, much like a mortgage.

Because HELOCs also are cheaper, there's no compelling reason to go with traditional home equity loans right now.

If a time comes when the interest rate on your line of credit is more than you would pay for a home equity loan, you could refinance into a fixed-rate second mortgage.

We don't think that will happen anytime this year or even next year, because of the Federal Reserve's heavily publicized campaign to make borrowing cheaper to avoid a recession.

A record number of homeowners -- particularly those with poor credit and expensive adjustable-rate mortgages -- are defaulting on their loans.

Those losses have panicked many of the big institutional investors that provide billions of dollars a year for home loans, resulting in a dramatic drop in the amount of money available for mortgages.

With home sales and prices falling across the country, economists fear that tight credit and reduced consumer spending could cause the economy to contract.

The Federal Reserve can prevent that by making it cheaper and easier for the commercial banks we deal with every day to obtain the money they need.

In theory, that allows banks to charge less for all types of consumer loans, encouraging us to borrow more, spend more and keep economic expansion from stalling out.

In reality, HELOCs are about the only types of consumer loans that are significantly less expensive than they were last fall, when the Fed began its rate-cutting campaign.

Car loans? A little. Mortgages? Credit cards? Private student loans? Nope.

Our advice: Take advantage of the new, lower HELOC rates while you can -- and if you can.

By Carolyn Siegel

Interest.com Associate Editor

Have a question about your finances? Ask us at editors@interest.com.