The national balance of home equity lines of credit rose $13 billion in the second quarter, the 17th consecutive quarterly increase, as homeowners locked into low mortgage rates increasingly tap their equity rather than refinance, according to the Federal Reserve Bank of New York’s latest household debt report.
The New York Fed’s Quarterly Report on Household Debt and Credit, released Aug. 11, found total outstanding HELOC balances reached $459 billion at the end of the second quarter, up from $446 billion in the first quarter. That marks a $142 billion recovery from the cycle low of $317 billion reached in the first quarter of 2022, an expansion the report says has been underway for more than four years.
The HELOC increase came even as total mortgage balances on consumer credit reports fell $74 billion during the quarter, to $13.1 trillion β a decline the New York Fed attributed to a reporting gap rather than an actual reduction in mortgage debt outstanding. Total household debt, which also includes auto, student and credit card balances, edged down $13 billion, or 0.1%, to $18.8 trillion. The New York Fed noted delinquency rates have held roughly steady across most loan types over the past two years, though it flagged continued elevated new delinquencies in auto loans and credit cards as categories worth watching.
The pattern reflects what economists call the “lock-in effect”: homeowners who refinanced or purchased between 2020 and 2022, when 30-year mortgage rates ran in the 3% to 4% range, have strong incentive to avoid trading that rate away. A HELOC lets a homeowner borrow against their equity while keeping their existing first mortgage intact.
“The current environment of high mortgage rates makes HELOCs attractive,” Realtor.com senior economist Joel Berner said in the outlet’s coverage of the data. “Where a cash-out refinance would land the homeowner in a 6%+ new mortgage, the HELOC offers access to cash without giving up a lower, older mortgage rate.” Berner added that the dynamic has particularly encouraged homeowners to renovate in place rather than sell and buy a different home at today’s rates.
Kevin Kenerson, president and senior loan originator at Nashville-based Lending Hand Mortgage, told Realtor.com that some borrowers are also using HELOCs to consolidate higher-cost debt. “They’re utilizing the HELOC to take advantage of the opportunity to pay off their higher debt, like the credit cards that are averaging a 22% on average interest rate,” Kenerson said. “Now they’ve paid off $50,000 or $100,000 in debt and have a fixed rate at 7%, 9% interest rate, which is much lower than that 22%.”
What it means: The New York Fed’s balance figures are the verified core fact here β HELOC debt has grown for more than four straight years and now sits within range of its pre-2008 peak. The characterizations of why homeowners are borrowing β to avoid losing a low rate, to renovate, to pay down costlier debt β are attributed analysis from Realtor.com’s economist and an outside loan originator, not independently confirmed motivations for every borrower. RealtyWire’s read: rising HELOC balances alongside a stagnant purchase-mortgage market is a symptom of the same lock-in dynamic that has kept existing-home inventory tight, as owners choose to improve their current homes rather than list them and shop for a new mortgage.
The report adds to a growing body of data on how much equity U.S. homeowners are sitting on. A separate analysis found mortgaged homeowners hold a record $17.9 trillion in home equity nationwide. The HELOC trend is also closely tied to the broader path of mortgage rates, which have stayed elevated for much of 2026 even as the Federal Reserve has held its benchmark rate steady in recent meetings.
