As home prices steadily ascend, homeowners find themselves perched atop greater wealth than ever before. For many, this has become more than just paper gains—it’s a resource to access powerful financial flexibility. In the first quarter of 2025, cash-out refinances surged to their highest level in nearly three years, representing around 60 percent of all refinance activity. On average, homeowners tapped $94,000 in equity, augmenting their mortgage payments by an estimated $590 and accepting a modest 1.45 percentage point increase in rate to unlock funds for major expenses. This trend reflects rising confidence and strategic use of housing wealth.
Yet equity borrowing isn't limited to cash-out refinances. Home equity loans and HELOCs remain attractive options as well. As of early 2025, Americans held approximately $35 trillion in home equity, with $11.6 trillion of that considered “tappable.” Despite this, only a small fraction—0.41 percent—was actually being tapped in Q1, signaling vast untapped potential. At the same time, average monthly payments to borrow $50,000 dropped significantly, from $412 to $311, helping to make equity access more affordable.
Among retirees and those balancing rising living costs, HELOC usage is on the rise once more, after nearly two decades of decline. After shrinking for 17 years, growth in HELOC balances turned positive in 2024 and has accelerated into 2025, artfully transforming home equity into a liquidity lifeline.
For homeowners contemplating renovations, home equity lending is now a prime tool. Analysts forecast a renovation rebound, with annual spending potentially reaching $477 billion by summer 2025—nearly matching the pre-slowdown record. The combination of substantial tappable equity and increasingly favorable financing conditions makes this a smart moment for value-added projects.
That said, equity leverage isn't without risks. Second mortgages carry additional liens on the property, potentially complicating resale or refinance and raising the stakes if the market corrects. Borrowers must balance their borrowing with a clear understanding of cost, repayment terms, and long-term goals.
For real estate professionals, these dynamics offer a strategic window of opportunity. Home equity loans and HELOCs can be positioned as tools for clients to enhance their properties, consolidate higher-cost debts, or fund life transitions. With interest on second liens currently near 2025 lows, but still thoughtful underwriting and client suitability remain essential.
Looking ahead, home equity is proving more than a static figure on a statement—it is active capital for renovation, consolidation, investment, or growth. Navigating it with discernment will define who thrives in this evolving market.
