HELOC Loan Balances Rise $13 Billion Nationwide as More Homeowners Tap Their Equity

The national balance of home equity lines of credit increased by $13 billion during the second quarter of 2026, according to a new report from the Federal Reserve Bank of New York.

This marks the 17th consecutive quarter of increases for these flexible lines of credit, known as HELOCs, the report says.

The figure comes from the New York Fed’s Quarterly Report on Household Debt and Credit, which provides information on the country’s mortgage, student, auto, and credit card debts—all of which add up to a skin-crawling $18.8 trillion in total household debt.

While mortgage balances shown on consumer credit reports declined $74 billion during the second quarter, for a total of $13.1 trillion at the end of June—which the Fed noted is due to a reporting gap, otherwise the balance would have stayed flat—the amount that homeowners have taken out against their homes increased.

The second quarter's $13 billion increase brought the outstanding HELOC balance to $459 billion—a dramatic increase from the low balance of $317 billion reached in the first quarter of 2022, according to the report.

In the first quarter of 2026, the country’s HELOC balances rose by $12 billion, to a total $446 billion, the New York Fed previously reported.

Why homeowners are gravitating towards HELOCs

Homeowners are looking to maintain their mortgage rates, and HELOCs can allow them to tap equity without refinancing at higher rates, according to Realtor.com® senior economist Joel Berner.

 “The current environment of high mortgage rates makes HELOCs attractive," says Berner. "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."

Those market conditions make HELOCs attractive, especially for doing home renovation work instead of buying a different home, which the "lock-in effect" has dissuaded many from doing, says Berner.

The “lock-in effect” refers to homeowners’ desire to keep the low mortgage rates they acquired between 2020 and 2022, when average rates were in the 3% to 4% range, rather than buying a new home with today’s higher rate.

In addition to home improvement, some homebuyers look to HELOCs as a way to pay off loans with higher interest rates, such as credit card loans, according to Kevin Kenerson, president and senior loan originator at Lending Hand Mortgage in Nashville, TN.

“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 explains. “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%.”

While these lines of credit have variable interest rates, the national average HELOC interest rate is 7.44% as of Aug. 5, according to Bankrate.

Another portion of homeowners may use a HELOC as a tool to build wealth for their family by putting the funds toward the purchase of additional properties, Kenerson says.

“They’re using it as a down payment, whether it's an investment property, a second home, or maybe even potentially another primary residence where they depart from the old property and put the old property under a lease and rent it out,” says Kenerson. “So, it’s also being used as wealth growth for the family.”

Kenerson recommends taking the interest rates and terms of a HELOC into account when deciding whether to take out a line of credit on home equity and with what lender.

It’s important for homeowners to remember that if interest rates increase, the monthly payment on an equity line could surge unexpectedly, so be cautious about taking on more debt than you can afford.

Plus, HELOCs come with a higher risk if you default. While defaulting on a credit card hurts your credit, the inability to pay toward a HELOC could lead to home foreclosure.