Americans tap record home equity to refinance debt and pay bills

Forty-eight million homeowners sat on $11.5 trillion in tappable equity entering the second quarter of 2025, giving families a bigger pool to borrow against as bills piled up. ICE Mortgage Technology data show that surge helped push HELOC withdrawals to their highest level since 2008, while mortgage lending reached its highest quarterly volume since 2022, driven by purchase and cash-out refinance loans.

The Consumer Financial Protection Bureau analyzed cash-out refinance borrowers between 2014 and 2021 and found that households used refinance proceeds to pay down credit cards and other non-mortgage debt, including auto loans. Those borrowers initially saw sharp improvements in credit scores, then a gradual worsening later on, although scores stayed above their pre-refinance levels.

After rates jumped in 2022, the CFPB said refinance originations declined and the mix of refinances changed. Cash-out loans became less common than before the rate spike, but homeowners who did refinance were increasingly using their mortgage to unlock cash rather than simply to replace an old loan with a cheaper one.

The Federal Reserve’s 2024 survey of household economics and decisionmaking, fielded in October 2024 and summarized in 2025, found financial well-being was similar to the previous two years but still below the high reached in 2021. Concerns about prices persisted even as labor market conditions remained solid, and the share of adults who would have difficulty covering an unexpected expense remained a key measure of strain.

The Fed’s 2025 results continued to show stable financial well-being, but still at a level slightly below where it stood before the coronavirus pandemic.