HELOC Balances Just Jumped the Most Since 2005: Why Homeowners Are Tapping Equity and What to Know Before You Borrow

Homeowners borrowed against their houses this summer at the fastest pace in about 20 years. Balances on home equity lines of credit (HELOCs) rose by $23 billion in the third quarter of 2026 to $481 billion, the biggest quarterly jump since 2005, according to the Federal Reserve Bank of New York. The main reason is simple: millions of owners locked in mortgage rates of 4% or less and don’t want to trade them for today’s rates near 7%, so they tap their equity instead of selling or refinancing. A HELOC can be a sensible way to pay for a renovation, but it uses your house as collateral and usually has a variable rate, so it’s worth understanding how it works before you sign.

What the New York Fed report found

The New York Fed’s Quarterly Report on Household Debt and Credit, released on Nov. 10, 2026, is built from a nationally representative sample of Equifax credit reports. Here are the housing numbers that matter most:

• HELOC balances: up $23 billion in the quarter to $481 billion, the 18th quarterly increase in a row and $59 billion more than a year earlier.
• HELOC credit limits: up $31 billion (2.9%), continuing an expansion that the New York Fed says began in 2022.
• Mortgage balances: up $257 billion to $13.4 trillion, although the bank notes that about half of that increase came from balances being reported again after a gap in the previous quarter.
• Total household debt: $19.1 trillion, up $334 billion (1.8%) in the quarter.
• Delinquency: 5.0% of all outstanding debt was in some stage of delinquency at the end of September, up 0.3 percentage points. The rate at which HELOCs moved into serious delinquency stayed flat.

For perspective, today’s total is still well below the peak. HELOC balances hit roughly $714 billion in early 2009, CNBC reported, citing an earlier New York Fed study.

Why so many homeowners are tapping equity now

The mortgage “lock-in” effect

Just under half of outstanding mortgages, 49.1%, carried rates of 4% or lower in the second quarter, according to a Realtor.com analysis cited by CNBC. Meanwhile, the average 30-year fixed rate was 7.30% on Nov. 10 according to Mortgage News Daily, after its biggest one-day jump in more than a month following a hotter-than-expected inflation report. (We covered the brief dip before that in our look at mortgage rates after the midterms.)

If you own a home with a 3% loan, selling to buy a new place or doing a cash-out refinance means giving that rate up. A HELOC is a second loan that sits on top of your existing mortgage, so the low first-mortgage rate stays untouched. Vanessa G. Perry of George Washington University told Marketplace that owners who have built up equity but aren’t moving may be using HELOC money for home improvements instead.

Owners are sitting on a lot of equity

Mortgage holders had $17.5 trillion in home equity in the third quarter, according to data firm Intercontinental Exchange (ICE), as reported by CNBC. “Tappable” equity, meaning the amount a borrower could access while still keeping at least 20% equity in the home, averaged $204,000 per borrower. If you’re not sure what your own house is worth, start with our guide to getting an accurate home value estimate.

Some households are borrowing to cover everyday costs

Not all of the borrowing is for kitchens and roofs. Chris Mayer of Longbridge Financial told Marketplace that a second group drawing on HELOCs is people struggling with inflation, including the cost of gas and food, and that he expects the trend to continue.

How a HELOC works

A HELOC is a revolving line of credit secured by your home. Unlike a home equity loan, which pays out a lump sum at a fixed rate, a HELOC lets you draw money as you need it, up to a set limit. Most have two phases:

• Draw period: often 5 or 10 years. You can borrow, repay and borrow again, and many lenders only require interest payments during this time.
• Repayment period: often 10 to 20 years. You can no longer draw, and you repay principal plus interest, so the monthly payment can rise sharply.

Most HELOCs have a variable rate tied to a benchmark such as the prime rate. The average rate on a $30,000 HELOC was 7.49% as of Nov. 4, according to Bankrate data cited by CNBC. HELOCs generally have lower upfront costs than a home equity loan or cash-out refinance, but the Consumer Financial Protection Bureau notes that your home is the collateral, which means you could lose it if you can’t repay.

What to check before you open or draw on a HELOC

This isn’t financial advice, and the right choice depends on your situation. These are the questions consumer experts and lenders’ own disclosures suggest asking:

1. Can you afford a higher rate? “If your budget only works at today’s rate, then your budget doesn’t really work,” certified financial planner Douglas Boneparth told CNBC. Ask the lender how high the rate can go (many HELOCs have a lifetime cap) and run your payment at that number.
2. What happens when the draw period ends? Boneparth warned that payments “potentially could double overnight” once principal kicks in. Ask for a sample payment for the repayment phase in writing.
3. What is the money for? Borrowing to improve the home can add value. Using a HELOC to pay off credit cards turns unsecured debt into debt secured by your house, which Boneparth called “a little trickier.” If spending habits don’t change, the balance can build up again.
4. Is the interest deductible? Under IRS rules in Publication 936, interest on home equity debt is generally deductible only if the money is used to buy, build or substantially improve the home that secures the loan, and only if you itemize. Check with a tax professional.
5. What fees apply? Look for annual fees, minimum draw requirements, inactivity fees and early-closure fees, and compare offers from more than one lender, including credit unions.
6. Could the line be frozen? According to the CFPB, lenders may stop you from drawing more if your home’s value drops significantly or your finances change for the worse. Don’t count on unused credit as your emergency fund.
7. Do you know your right to cancel? For a HELOC on your main home, federal law gives you three days after the account is opened to cancel in writing and get your fees back, according to the CFPB’s HELOC brochure.

Alternatives worth comparing

A fixed-rate home equity loan gives you a predictable payment if you know the exact cost of a project. A cash-out refinance usually only makes sense if today’s rate is close to or below your current one, which isn’t the case for most owners right now. For smaller projects, saving up or phasing the work can avoid borrowing altogether. If you’re planning a remodel, see how other homeowners are paying for renovations for more ideas.

FAQ

How much are Americans borrowing on HELOCs?

Outstanding HELOC balances were $481 billion at the end of September 2026, up $23 billion in three months, according to the New York Fed.

Is a HELOC better than refinancing right now?

For owners with a low first-mortgage rate, a HELOC lets them borrow without replacing that rate, which is why many choose it. But a HELOC rate is usually variable and was averaging about 7.49% in early November, so compare the total cost of each option.

Can I lose my home with a HELOC?

Yes. A HELOC is secured by your home, so falling behind on payments can lead to foreclosure, just like with a first mortgage.

Are HELOC delinquencies rising?

Not much so far. The New York Fed said the rate at which HELOC balances moved into serious delinquency stayed flat in the third quarter, even as overall delinquency ticked up to 5.0%.

Sources: Federal Reserve Bank of New York (Nov. 10, 2026), CNBC (Nov. 10, 2026), Marketplace (Nov. 11, 2026), CNBC mortgage rates (Nov. 11, 2026), CFPB and IRS Publication 936. This article is general information, not financial or tax advice.