US Home Equity Hits Record $18 Trillion as Underwater Loans Rise

Years of home-price appreciation have built a vast equity cushion for US mortgage holders, giving many households an additional source of borrowing power. Home equity lines of credit, or HELOCs, allow owners to borrow against that wealth, but elevated mortgage rates have made refinancing less attractive and widened the divide between aggregate housing gains and the financial strain facing some borrowers.

US mortgage holders’ combined home equity reached a record $18 trillion for the first time in July, according to the latest report from ICE Mortgage Technology. The milestone masked a troubling increase in underwater loans, where mortgage balances exceed property values. With high rates continuing to suppress conventional refinancing demand, lenders are stepping up promotion of new HELOC products designed to tap homeowners’ accumulated equity.