Homeowners are tapping into their home equity at a pace not seen since 2008. The latest ICE Mortgage Monitor report reveals that second lien equity withdrawals surged 22 percent year over year, reaching $25 billion in the first quarter of 2025. This marks the largest first-quarter volume in 17 years, signaling a shift in borrower behavior as loan affordability improves.
The numbers are staggering. U.S. mortgage holders entered the second quarter with a record $17.6 trillion in home equity, with $11.5 trillion considered tappable. This means millions of homeowners have access to cash while maintaining at least a 20 percent equity cushion.
Banks are aggressively pushing HELOCs, capitalizing on falling interest rates. The average introductory rate on second lien HELOCs dropped by 2.5 percentage points in recent quarters, settling below 7.5 percent in March. If market forecasts hold, rates could dip into the mid-6 percent range by 2026, making borrowing even more attractive.
The cost of tapping home equity is dropping fast. According to ICE’s McDash Home Equity database, the monthly payment needed to borrow $50,000 fell from $412 in early 2024 to $311 by the end of the first quarter of 2025. This decline is fueling demand, as homeowners look for ways to access liquidity amid economic uncertainty.
The Federal Reserve’s anticipated rate cuts could accelerate this trend. If borrowing costs continue to decline, more homeowners may turn to HELOCs as a financial lifeline. This raises important questions about long-term stability.
Are homeowners rushing to pull cash from their properties out of necessity, or is this a sign of confidence in the market? The surge in withdrawals suggests that many are looking for ways to manage expenses, invest, or consolidate debt. But history has shown that rapid increases in home equity borrowing can signal deeper financial pressures.
The housing market is at a crossroads. With mortgage rates easing and home prices remaining high, homeowners have more leverage than ever. The question is whether this borrowing spree will lead to economic growth or another financial bubble.
Sources:
https://vermontbiz.com/news/2025/june/02/june-2025-mortgage-monitor-highest-heloc-withdraws-2008