Homeowners tapped $47B equity in Q1 2026. What borrowers should know
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Even as house price growth has slowed, the housing boom of the first half of the 2020s means that many homeowners have significant amounts of equity and appear keen to use it.
Homeowners benefited from an estimated $47 billion in equity (the difference between mortgage balances and the market value of the property) in the first three months of 2026. a new report From financial markets technology and data company Intercontinental Exchange. While this figure is down from $49 billion in the final quarter of 2025, it marks the highest first-quarter withdrawal figure since 2021.
Home equity lines of credit, or HELOCs, and home equity loans accounted for 54% of withdrawals in the quarter, with the remainder coming from cash-out mortgage refinancings, the report shows. Almost two-thirds of second lien borrowers have mortgages originated between 2020 and 2022, when average rates were in the 3% to 4% range.
“The housing market continues to be defined by the lockdown effect,” Andy Walden, Head of Mortgage and Housing Market Research at ICE, said in the report.
“Millions of homeowners are sitting on first mortgages with rates well below current market levels, making second mortgages and HELOCs an attractive way to access equity without giving up those loans,” Walden said.
Homeowners hold $11 trillion in equity
Standard 30-year fixed-rate mortgage rates are currently running above 6.5%, According to Mortgage News Daily. After low rates offered from 2020 through most of 2022, rates fell to 8% in October 2023 before trending downward.
The median price of an existing home in the United States was $429,300 in May; that figure was $423,700, up 1.3% from a year ago. based on To the National Association of Realtors. However, this figure is above 50.8 percent. May 2020 the average price is $284,600.
The result is that estimated at $11 trillion Home equity available to borrowers according to ICE. And experts say it may be tempting to access it for extra money.
But “home equity is not free money,” said certified financial planner Joon Um, a tax advisor at Secure Tax and Accounting in Beverly Hills, Calif.
“Since borrowing costs are still relatively high, homeowners should make sure the purpose of the loan is strong enough to justify the cost,” Um said.
In other words, the reason for tapping equity has to make financial sense, experts said.
Since borrowing costs are still relatively high, homeowners should make sure the purpose of the loan is strong enough to justify the cost.
Joon Um
Tax advisor with Safe Tax and Accounting
For example, if the funds are used for repairs or improvements, “then the money is being spent on capital improvements for your home, which may make sense,” said George Gagliardi, CFP, founder and financial advisor at Coromandel Wealth Strategies in Lexington, Massachusetts.
“If it’s for vacation or other discretionary expenses, ask yourself if you’re currently living beyond your means in terms of your income,” Gagliardi says. he said. “You could end up paying interest on that summer vacation for years.”
Refinancing or getting a second loan
If you’re considering tapping into your equity, it’s helpful to know the differences between the options available.
Cash-out refinancing usually involves refinancing your mortgage and taking out some equity as cash as part of the new loan.
This path involves completing the entire mortgage approval process as well as paying closing costs such as fees, taxes, and title insurance, and usually runs between 2% and 5% According to Zillow, the new loan. Lenders may let you roll those costs into the new mortgage; This means spreading them out and paying interest over the life of the loan.
But Um said, “It may be difficult to justify a cash-out refinancing if it means giving up an existing mortgage loan for a much lower rate.”
According to the ICE report, nearly half of refis converted to cash in the first quarter came from borrowers refinancing mortgages originated in 2023 or later. The other quarter came from borrowers giving up the low rates they had secured between 2020 and 2022 to withdraw equity.
Meanwhile, some homeowners are choosing to keep their first mortgage and instead take out a home equity loan, which often comes with a fixed interest rate and fixed payment amount. The average rate for a five-year mortgage loan is 8.12% as of June 3. According to Bankrate. The average for a 15-year loan is 8.2%. Generally, the longer the loan, the higher the interest rate.
These loans also come with closing costs, although they are lower than those associated with a first mortgage, according to Bankrate.
Things to consider about HELOCs
HELOCs, meanwhile, allow you to tap into a line of credit over time when you need the money, rather than taking it out all at once, as with a home loan.
While HELOCs have less upfront costs than a mortgage, they often come with a variable interest rate, so they move up and down based on a benchmark like the one below. prime rateBanks use this as the basis for setting rates on various loans. And although the Federal Reserve does not control this rate, it is affected by changes the Fed makes in the so-called federal funds rate.
The average interest rate for a $30,000 HELOC is 7.43% as of June 3. According to Bankrate.
Many HELOCs also have a “withdrawal” period during which you can withdraw funds, and this usually lasts five or 10 years. During this time, you usually only have to pay interest on the funds you withdraw. But after that, you will enter a repayment period of, say, 10 or 20 years, during which you will be required to repay both interest and principal. So if you’re only paying interest, your payments will increase.
“Make sure the payments fit comfortably within your budget, and remember that your home is collateral,” Um said.
