More Americans are accessing property wealth to pay for home renovations and other spending, thanks to home equity levels doubling to $35 trillion during the past seven years.¹ 

Balances on home equity lines of credit, or HELOCs, rose $9 billion in the fourth quarter of 2024 to an aggregate of $396 billion, according to the Federal Reserve Bank of New York. HELOC balances have risen steadily after hitting a low of $79 billion in early 2022.²

Closed-end home equity loans have also seen increased interest from borrowers. There were about 330,000 new loan originations totaling nearly $24 billion in the first half of 2024, according to data from CoreLogic. Those levels haven’t been seen since 2009.³

Both HELOCs and home equity loans allow consumers to borrow against the value of their homes, but in different ways. Home equity loans function like a second mortgage, giving borrowers an upfront lump sum with a fixed repayment schedule, and usually with a locked interest rate.⁴

In contrast, HELOCs have features like credit cards — lines of credit that homeowners can tap as needed, and then pay back, with variable interest rates. The revolving nature of HELOCs allows borrowers to only pay interest on the amount drawn, not on the full line of credit^.5

Read more: Equity rich: How American homes built $30K-a-year in value

Hard to let go 

Both types of loans differ from a cash-out refinancing, in which an existing mortgage is replaced with a new loan and terms. Nearly 7 in 10 borrowers have a mortgage rate below 4.5% and about one-quarter have an ultra-low rate below 3% — rates that many are reluctant to let go.⁶

Home equity loans and HELOCs allow borrowers to keep their first loans while tapping recent equity gains for renovations or paying off debts. While home equity rates remain historically high, they’ve eased in recent months because they tend to move alongside the benchmark interest rates that the Fed has cut.⁷ 

The average introductory rate on a HELOC declined from 9.9% in January 2024 to 8.2% by the close of the year, according to data from Intercontinental Exchange.⁸ It’s been a similar story with closed-end home equity loans, making such lending an attractive option for paying off debts like credit cards or personal loans, which typically carry double-digit rates.⁹

Surveys indicate that more than half of home equity borrowers are using the funds for home upgrades, like a nicer kitchen, as well as required maintenance and expenses. High home prices and a very competitive buyer’s market has many Americans favoring their current properties over something new.¹⁰

It’s estimated that roughly 60% of U.S. homes are owned by older Americans who would prefer to stay in their current locations as they age. Seniors now account for about 40% of home equity lines of credit, compared to 19% in 2009.¹¹

Read more: Home sweet home: A majority of Americans want to age in place

Accessing equity 

While home equity lending has picked up, it remains well below peak levels. The nearly $400 billion in HELOC balances makes up roughly 2% of accessible home equity, far below the 11% level last seen in 2009.¹²

It’s unclear if home equity lending is at the beginning of a longer upward trend, or if everyone would benefit.¹³ As with other types of loans, eligibility for HELOCs and home equity loans often depends on good credit scores and other borrower characteristics.¹⁴

Some homeowners who might not qualify for such loans — or who want to avoid monthly payments or high interest rates — have turned to niche products like home equity sharing agreements.¹⁵

Under such agreements, homeowners receive a lump sum in exchange for a share of a home’s future appreciation. There’s no interest or required payment, but the homeowner must repay the debt plus a percentage of the home’s equity when the house is sold or when the contract expires. The agreements vary in length from 10 to 30 years.¹⁶

Guarding home wealth 

More than half of Americans (52%) define financial success as purchasing property, according to Empower research, while 71% say there is no single measurement of financial success.

Home values are certainly a big driver of personal wealth, but some owners have experienced downsides when natural disasters strike. Securing a home equity line or mortgage can be increasingly difficult if lenders are wary of the additional risk.¹⁷

The recent increase in high-profile natural disasters has led to increased calls for homeowners to diversify their assets and investment strategies, and to build up reserves of cash for home emergencies.¹⁸

Even with standard insurance coverage, natural disasters like floods, earthquakes, fires, and tornadoes can cause significant damage to home values — and personal wealth — because many policies can exclude specific events like earth movement and flooding.¹⁹

Many Americans lack separate policies for those events.  Flood insurance remains the biggest insurance gap across the U.S., with only about 6% of homeowners having coverage, often because it’s required. An estimated 90% of natural disasters involve flooding.²⁰

There’s also been a sizeable increase in policy cancellations in recent years, as homeowners grapple with increased premiums and insurance companies grow more sensitive to natural disaster risks and rapidly growing claims.²¹ 

The average annual property insurance premium rose 14% in 2024 to nearly $2,300. In recent years, more homeowners have been accepting higher deductibles on their policies in exchange for paying lower premiums, leaving them exposed to higher losses. The average insurance deductible for a mortgage holder has increased 22% in the past 3 years.²² 

Read more: How much should you have in an emergency fund