Homeowners tapped $47B in equity in Q1 2026. What borrowers need to know

Even though house price growth has slowed, housing growth in the first half of the 2020s means that many owners are sitting on a lot of equity – and they seem willing to use it.

Homeowners bought an estimated $47 billion in equity — the difference between their mortgage balance and the property’s market value — during the first three months of 2026, according to a new report from Intercontinental Exchange, a financial markets technology and data company. While down from $49 billion in the final quarter of 2025, this figure represents the highest number of first-quarter withdrawals since 2021.

Home equity lines of credit, or HELOCs, and mortgages accounted for 54% of withdrawals in the quarter, and the rest came from cash-out mortgage refinances, the report shows. About two-thirds of those secondary lenders have mortgages originated between 2020 and 2022, where average rates were 3% to 4%.

“The housing market continues to be defined by the lock-in effect,” said Andy Walden, head of housing and housing market research at ICE, in the report.

“Millions of homeowners are sitting on their first mortgage at rates below current market rates, making second mortgages and HELOCs an attractive way to access equity without giving up those loans,” Walden said.

Mortgage rates with a 30-year fixed rate are currently trending above 6.5%, according to Mortgage News Daily. After low prices were offered from 2020 through most of 2022, prices fell by 8% in October 2023 before leveling off.

The median price of an existing home in the US was $429,300 in May, up 1.3% from $423,700 a year ago, according to the National Association of Realtors. However, that figure is about 50.8% above the May 2020 median price of $284,600.

The bottom line is that there is approximately $11 trillion in home equity available to borrowers, according to ICE. And, experts say, reaching out for extra cash can be tempting.

However, “home equity is not free money,” says certified financial planner Joon Um, a tax consultant with Secure Tax & Accounting in Beverly Hills, California.

“Since the cost of borrowing is still high, house owners must make sure that the purpose of borrowing money is strong enough so that the cost is clear,” said Um.

In other words, the reason for touching the equity must make sense from a financial point of view, say experts.

For example, if the funds are used for repairs or improvements, “then the money is used for improvements to your home, which may make sense,” says CFP George Gagliardi, founder and financial advisor of Coromandel Wealth Strategies in Lexington, Massachusetts.

“If it’s for a vacation or other expenses you want, ask yourself if you are living beyond your means according to your income,” said Gagliardi. “You could end up paying years of interest on that summer vacation.”

If you’re thinking of tapping your equity, it’s worth knowing the difference in options available.

A cash-out refinance usually involves refinancing your mortgage and taking the equity as cash as part of the new loan.

This route involves going through the entire home approval process, as well as paying closing costs — which include things like fees, taxes and title insurance — and typically uses 2% to 5% of the new loan, according to Zillow. Lenders may allow you to roll those costs into a new mortgage, meaning you’ll spread them over the life of the loan and pay the interest.

However, “a cash-out may be difficult to justify if it means giving up an existing mortgage with a very low rate,” says Um.

In the first phase, about half of the payments came from borrowers who refinance mortgages that were originated in 2023 or later, according to the ICE report. Another quarter came from borrowers giving up the low rates they received between 2020 and 2022 to withdraw equity.

Meanwhile, some homeowners choose to keep their original mortgage and instead get a home equity loan, which often comes with a fixed interest rate and fixed payment amount. The average five-year mortgage rate is 8.12% as of June 3, according to Bankrate. For a 15-year loan, the rate is 8.2%. Generally, the longer the loan, the higher the interest rate.

These loans also come with closing costs, although they may be lower than those associated with a first mortgage, according to Bankrate.

Meanwhile, HELOCs allow you to tap the line of credit over time as you need the money instead of all at once, as you would with a home loan.

Although HELOCs may have fewer up-front costs than mortgages, they often come with variable interest rates, so they will fluctuate based on a benchmark such as prime rate, which banks use as a basis for setting various loan rates. And, although the Federal Reserve does not control that rate, it is influenced by changes made by the Fed in what is called the federal funds rate.

The average interest rate for a $30,000 HELOC is 7.43% as of June 3, according to Bankrate.

Most HELOCs have a “draw” period during which you can take out the money, usually five or 10 years. During that time, you are usually only required to pay interest on any withdrawals. However, after that, you will enter the repayment period, that is, 10 or 20 years, when you need to pay both interest and principal. As a result, your payments will jump if you only pay interest.

“Make sure the payments are in line with your budget, and remember that your home is collateral,” said Um.