In a sign of financial stress, an increasing number of homeowners are withdrawing equity from their homes for cash to pay down other high-interest consumer loans and credit cards. Debt consolidation is cited as the top reason for people taking out Home Equity Lines of Credit. See, Should you use your home equity to pay off credit-card debt? Read this before taking out a HELOC:
It’s a sluggish moment for homeowners who are trying to sell but a brisk one for those who want to tap into their home equity. After waning in popularity for about a decade, more consumers started turning to Home Equity Lines Of Credit (HELOC) around 2022, as home values surged. And if the Federal Reserve cuts interest rates this year, it could help broaden the appeal of these credit lines even more.
Americans racked up $1.18 trillion in credit-card debt as of the first quarter, with 172 million people carrying a balance on their cards. Households withdrew almost $25 billion through HELOCs during the first quarter of 2025, according to Intercontinental Exchange–the biggest first-quarter jump to open these lines of credit since 2008.
Credit cards with unpaid balances charged a crushing 21.91% average annual percentage rate in February, and personal loans averaged 11.66% interest, Federal Reserve data showed this month. Meanwhile, the average HELOC rate is currently 8.27%, according to Bankrate.
