Americans owed $481 billion on credit lines backed by their homes at the end of the third quarter, up $23 billion in the largest quarterly increase since 2005, the Federal Reserve Bank of New York said Tuesday.
Homeowners Use Equity To Access Cash
The New York Fed’s third-quarter 2026 Household Debt and Credit Report showed balances on home equity lines of credit (HELOCs) rose for an 18th consecutive quarter. A HELOC is a credit line that lets homeowners borrow against the value they have built in a property, withdrawing money as needed instead of receiving a lump sum. Home equity is the portion of a home’s value left after subtracting outstanding mortgage debt.
Mortgage holders collectively had $17.5 trillion in home equity in the third quarter. Within that total, the average amount of equity borrowers could potentially access while retaining at least 20% ownership of their home’s value was $204,000 per borrower, up 1.2%, or $16,600, from a year earlier. Both figures come from a third-quarter report by Intercontinental Exchange (ICE).
Low Mortgage Rates Keep Owners In Place
The increase comes as homeowners remain reluctant to replace existing low-rate mortgages with new loans at higher rates. J.P. Morgan analysts have described the U.S. housing market as effectively frozen, noting that about 75% of borrowers had mortgage rates below 5%, while 55% had rates below 4%.
That may help explain why some homeowners are choosing additional loans against their properties rather than replacing their existing mortgages. Certified financial planner Douglas Boneparth said HELOCs let homeowners “borrow against their equity without giving up the low interest rate on their home,” CNBC reported Tuesday.
Borrowing Comes With Repayment Risks
HELOCs generally carry variable interest rates. Bankrate put the average rate on a $30,000 HELOC at 7.49% as of Nov. 4. Many HELOCs have a draw period, often lasting five or 10 years, during which borrowers can withdraw money and may make interest-only payments, depending on the loan terms. Once that period ends, they typically enter a repayment period, often lasting 10 to 20 years, when they must repay both the borrowed amount and interest, according to the Consumer Financial Protection Bureau.
Boneparth cautioned that payments can increase when the repayment period begins. He also warned that using a HELOC to pay off credit-card debt turns unsecured borrowing into debt backed by the home, the report added.
Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.
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