About 2.4 million U.S. mortgage holders now have at least $1 million in home equity, the most ever recorded for a third quarter, according to the November 2026 Mortgage Monitor that Intercontinental Exchange (NYSE: ICE) released Nov. 9. The count is up 6% from a year earlier, even as 30-year mortgage rates climbed above 7% this fall and the share of borrowers underwater on their loans climbed to its highest third-quarter level since 2018.
The two findings sit side by side in the report, and together they describe a housing market with very uneven equity: long-tenured owners in high-cost coastal markets have accumulated extraordinary wealth, while recent buyers with small down payments in the South and West are losing ground.
Record home equity, but modest growth
Mortgage holders collectively held $17.5 trillion in equity at the end of the third quarter, up 1.4% from a year earlier, ICE said. That total eased seasonally from the second quarter, when ICE put it at about $18 trillion, but the annual gain is the largest since the second quarter of 2025, according to the full report.
Home prices are rising only slowly, with ICE’s index up 1.0% year over year in October. Tappable equity, the amount owners could borrow against while keeping a 20% cushion, rose 1.2% from a year earlier to an average of $204,000 per borrower, an increase of $16,600.
Outstanding first- and second-lien mortgage debt reached a record $15.3 trillion, against $32.8 trillion in underlying home values, which ICE said was down from $33.1 trillion in the second quarter but up from $31.9 trillion a year earlier. That puts the market’s combined loan-to-value ratio at 46.6%, matching its highest level since 2022 but well below the 53.4% of the third quarter of 2019.
Where the equity millionaires are
Nearly 9 million mortgage holders had at least $500,000 in equity entering the fourth quarter, up 4% and the largest third-quarter total on record, ICE said.
California dominates the top tier. The state is home to 1.16 million equity millionaires, 49% of the national total, and 16% of its mortgage holders have at least $1 million in equity, according to the report. New York was a distant second with 189,000, followed by New Jersey with 141,000 and Florida with 104,000.
By metro, Los Angeles has the most: 407,000 mortgaged homes, or 23%, carry more than $1 million in equity. San Jose has the highest rate among major metros at 37% of mortgage holders, followed by San Francisco at 28%, Los Angeles at 23%, Bridgeport, Conn., at 21% and San Diego at 18%. The New York-Newark area counted 310,000 equity millionaires, nearly 12% of homes there.
“Homeowners are sitting on substantial housing wealth, with 2.4 million mortgage holders now holding at least $1 million in equity,” Andy Walden, ICE’s head of mortgage and housing market research, said in the release. “In a higher rate environment, cash-outs are making up a greater share of refinances, with those homeowners giving up historically low mortgage rates and taking on higher monthly payments to tap into their equity.”
The other end: more borrowers underwater
About 2% of borrowers, or 1.1 million, are underwater, which ICE called the largest third-quarter share since 2018. Another 8.4%, or 3.5 million, have less than 10% equity, the highest share since 2017.
The report ties the problem to recent low-down-payment lending: 88% of underwater mortgages were originated since 2022, and 75% are FHA or VA loans. Six percent of all FHA loans and 8.6% of VA loans are underwater, compared with 0.5% of conventional loans; among loans made since 2022, the shares rise to 13% for FHA and 19% for VA.
Dallas, where ICE said prices are 5.6% below their recent peak, has the largest underwater population among major markets at 63,000 homeowners, followed by Austin at 44,000, where prices are 23.4% off their peak, and Phoenix at 43,000. The highest negative-equity rates are in Cape Coral, Fla. (11.2%), Lakeland, Fla. (8.9%), Austin (8.4%), San Antonio (7.4%) and Tampa, Fla. (6.1%). The number of borrowers who are both underwater and at least three payments behind rose to 362,000 from 208,000 a year earlier, the most since 2018.
That split echoes what ICE found in its August Mortgage Monitor, when record equity coincided with a 44% annual jump in underwater borrowers.
Cash-out refinances take over
Higher rates have reshaped refinance activity. Cash-out transactions made up about 1 in 7 rate locks in recent weeks, while purchase loans accounted for roughly 80% of locks in early October, among the highest shares since June 2024, ICE said. Rate-and-term refinances fell below 5% of lending.
Adjustable-rate mortgages accounted for more than 10% of early October locks as 30-year fixed rates moved above 7%. The points-adjusted spread between 5/1 ARMs and 30-year fixed loans widened from about 75 basis points over the summer to more than 100 basis points, making ARMs more attractive, a trend other lock data have also shown, as we have reported. ICE’s 30-year rate-lock index eased from a 7.42% peak on Oct. 7 to 7.15% on Nov. 4.
For servicers, the shift is costly. They retained 27% of refinancing borrowers in the third quarter, down four percentage points from the second quarter; retention of rate-and-term refinancers fell to 30% from 39%, while cash-out retention held at 26%. Cash-out refinances accounted for 75% of all refinance-related loan losses, and servicers kept just 15% of cash-out borrowers whose loans dated to 2019 or earlier.
“Traditional rate-based retention strategies aren’t effective for borrowers who are motivated by access to equity rather than interest rate savings,” said Bob Hart, president of mortgage technology at ICE, who said servicers need better visibility into borrowers’ equity positions.
The lock-in effect is fading only slowly. Loans with rates below 4% fell to 49% of active mortgages, below half for the first time since the second quarter of 2020, ICE said, with 26.9 million such loans still outstanding. On our reading, that combination of large equity cushions and rates far below market means equity-rich owners are more likely to borrow against their homes than to sell them, which helps explain why cash-outs, rather than home sales, are driving so much of the refinance market. More coverage of rates and lending is in our mortgage section.
