Homeowner equity continues to grow. According to the November 2024 Mortgage Monitor Report from Intercontinental Exchange (ICE), a data and technology provider, U.S. mortgage holders withdrew $48 billion in home equity during Q3 2024, the largest amount since the Federal Reserve began its current tightening cycle two years ago. This included $27 billion from second lien loans and $21 billion from cash-out refinancing—both reaching two-year highs. However, homeowners continue to be cautious, withdrawing only 0.42% of available tappable equity, much lower than the 0.92% average seen during the past decade.
Elevated interest rates have been a deterrent to homeowner equity utilization in recent quarters, as 30-year mortgage rates climbed at times into the high 7% range, curtailing cash-out refinance activity, and the average introductory rate on second lien home equity lines of credit (HELOCs) rose above 9.5%. However, the Federal Reserve recently began to cut short term interest rates, to which HELOC rates are closely pegged, with additional cuts expected on the horizon. As Walden points out, this could make equity withdrawals both more affordable and more attractive. Read more