American homeowners are sitting on a pile of housing wealth they can borrow against without selling anything. Home equity line of credit balances jumped $23B in the third quarter, the largest quarterly increase since 2005, and lately the borrowing has run at a pace last seen in the middle of the last housing boom. The strange part is the price tag, because this borrowing is happening while the cost of it keeps climbing.
The home equity line comes back
Balances on home equity lines of credit, revolving loans secured by a house, climbed to $481B in the third quarter of 2026. The $23B increase was the largest since 2005, and the 18th straight quarterly rise.
Over the past year, HELOC balances grew by $59B. Lenders are encouraging it, approving $31B of fresh HELOC limits in the quarter alone.
Mortgages Led the Quarter but Home Equity Lines Grew Fastest Since 2005
Quarterly change in household debt balances, Q3 2026, $B
Bar chart. Mortgage: Change ($B) $257. Home equity line of credit: Change ($B) $23. Credit card: Change ($B) $22. Auto loan: Change ($B) $21. Student loan: Change ($B) $5. Other: Change ($B) $7.
Source: Federal Reserve Bank of New York
Balances remain far below the ~$714B peak hit in the first quarter of 2009, and well above the $317B low of early 2022.
Why moving costs more than borrowing
The housing market is stuck. The lock-in is arithmetic. In the second quarter, 49.1% of outstanding mortgages had a rate of 4% or lower, so a seller would trade a cheap loan for a dearer one.
The median price of an existing home was $417.5K in September, according to the National Association of Realtors, up just 1.3% from a year earlier and nearly 54% above September 2019.
Mortgage holders collectively held $17.5T in home equity as of the third quarter, with an average of $204K per borrower available to tap, according to Intercontinental Exchange. Borrowing against that is the cheaper way to get cash out. Whether it is the smarter move depends on the math, and when cashing out makes sense has its own guide.
The cost of tapping equity now
The average rate on a $30K HELOC was 7.49% as of Nov. 4, based on Bankrate data. Most of these lines carry variable rates tied to benchmarks like the prime rate, which moves with the Fed.
There's a second trap built into the product. HELOCs usually start with a draw period of five or 10 years when only interest is due, and payments can roughly double once principal repayment begins. The HELOC reset has its own history.
New mortgage originations hit $595B in the quarter, up from $505B in the second, even with Freddie Mac putting the 30-year fixed average at 7.18% as of Nov. 5.
What the borrowing covers up
Total household debt rose $334B in the quarter to $19.1T, a record. Mortgage balances grew $257B to $13.4T, though about half of that increase was balances being re-reported after a data gap, not new loans. Total household debt is up $520B from a year earlier.
Home Equity Line Balances Are Climbing Back From the 2022 Low
Outstanding HELOC balances at selected quarters, $B, through Q3 2026
Line chart. Q1 2009: Balance ($B) $714. Q1 2022: Balance ($B) $317. Q2 2026: Balance ($B) $459. Q3 2026: Balance ($B) $481.
Source: Federal Reserve Bank of New York, CNBC
Credit card balances rose $22B to a record $1.29T, while auto loans added $21B and student loans $5B. Repayment is getting harder, with 5% of outstanding debt in some stage of delinquency, up 0.3 points from the second quarter.
About 62k people had a new foreclosure notation added to their credit reports in the quarter, up from about 55,000 in the second.
The strain isn't spread evenly. New York Fed researchers found the gap in credit card delinquency between lower-income and higher-income neighborhoods has widened since 2022.
Homeowners with equity can keep funding spending through their houses, while households without it fall behind on cards. The line of credit funding today's spending becomes a secured claim on the roof once repayment starts.
