HELOC debt nationwide increased by 7.2% in 2024, marking the third consecutive year that HELOC balances have grown after a decade of decline. Long overlooked as a borrowing method, it would appear home equity lines of credit (HELOCs) are in vogue once again.
Responsibly used, HELOCs can have a few major benefits for homeowners with equity. Commonly, they're used to consolidate existing debts or to undertake home renovation projects, which are becoming more common as the housing market remains largely frozen in 2025.
As mortgage originations continued to languish over the past two years, the number of HELOC originations—a relative backwater for lenders until recently—began rivaling those of mortgages. Since 2023, one new HELOC has been opened for every two new mortgages originated.
Part of the mortgage origination drought not often commented upon is that much of the evaporation took the form of mortgage refinancing. While cash-out refinancing was commonplace last decade, it's no longer an option that makes financial sense for most homeowners with a mortgage, as most would be refinancing a low-rate mortgage into a higher-rate one.
As part of its continuing coverage of consumer credit and debt, Experian looked at anonymized and aggregated consumer data through the third quarter (Q3) of 2024 to observe recent trends in the U.S. home financing market, including those once-forgotten refinancing tools: home equity lines of credit.
Experian
1 / 8Overall, HELOC debt nationwide grew to $359.9 billion in 2024. This recent growth trend follows a decade of hibernation, during which time the average HELOC balance stayed roughly stable. In 2024, the average HELOC balance increased from $42,139 to $45,157, making the largest jump in recent years.
Experian
2 / 8HELOCs took a backseat during the low-interest era brought on by the pandemic. Instead of tapping existing home equity with a HELOC, homeowners with financed properties were lining up to trade in their old mortgage for a newer, less-costly one—and take out some extra cash during the process.
Cash-out refinance fever reached its peak in Q4 2021, when nearly three-quarters of a million homeowners received cash-out refinance loans in a single quarter, according to Federal Housing Finance Agency data.
The mortgage refinancing craze, alas, is largely gone. These days, most mortgaged homeowners have a fixed-rate mortgage of less than 4% annual percentage rate (APR), according to Freddie Mac. For most new loans, however, mortgage rates continue to range from 6% to 7% for 30-year mortgages. With rates this high, the refinancing route will likely be closed to most borrowers for quite some time. Enter HELOCs to unlock the home equity that is accumulating for many mortgage payers.
A HELOC is a line of credit secured by the equity a homeowner has in a property. HELOC lenders allow homeowners to tap up to a certain percentage of the paid-off portion of their mortgage. For instance, someone who has a home valued at $400,000 with $100,000 remaining on their mortgage may be able to tap up to 80% of that equity—$240,000—in the form of a HELOC.
Experian
3 / 8Tappable home equity approached $12 trillion going into 2025, according to industry observer ICE Mortgage Monitor. And while not as financially delicious as a new lower-rate mortgage with a side of cash, in this environment, home equity financing as low as 8% APR (in early 2025) is increasingly attractive.
Despite a HELOC's collateralized nature, however, favorable terms aren't automatic—nor is being approved for a HELOC at all. Here's what homeowners looking to borrow need to have in hand before applying:
Experian
4 / 8In addition, borrowing against one's home equity has other risks to consider, including the potential loss of your home in the event your HELOC isn't repaid.
There's additional interest rate risk as well, as most HELOCs have variable interest rates, much like credit cards. Although HELOCs have much lower APRs than most credit cards, their variable nature should still be weighed carefully, says Susan Allen, chief product officer for Experian Mortgage.
"Homeowners accustomed to a fixed-rate first mortgage should be cognizant of the variable rates typical of HELOCs, which can lead to unpredictable payments over time," Allen says.
Fluctuations in home values could also present risk when borrowing against home equity, Allen advises: "Although home prices are at historic highs, there is no guarantee that prices will continue their rise. Forecasts are mixed, and some markets are seeing modest home price declines."
Experian
5 / 8Most homeowners don't borrow all they're eligible for. Across the U.S., average HELOC limits range from $60,000 to $200,000. Often, if your HELOC limit is larger, you'll receive a lower APR than if you use less of the power of your existing home equity.
A combination of underlying equity and generally higher-than-average home prices explain the relatively larger HELOC credit limits in California and Massachusetts. Limits—as well as balances—are more modest in the Midwest. Only one state, Louisiana, saw the average fall slightly in 2024.
Experian
6 / 8The average credit limit for HELOCs in 2024 was $121,613; that's 3.4% more than 2023's average of $117,598. Based on an average HELOC balance of $45,157, homeowners with HELOC balances are collectively using about 37% of their lines of credit—up slightly from the 36% observed in 2023.
Generations that now comprise most of the workforce, millennials and Generation X, are tapping more of their home equity than others by a significant margin. That's not an especially surprising detail, as HELOC financing terms generally require a steady income and a decent amount of equity. Millennial and Gen X balances both grew by 8.2% in 2024, and both generations' average balances exceeded $50,000.
Experian
7 / 8The youngest homeowners in Generation Z likely haven't built up enough home equity in many cases for HELOCs to yet make sense for them, which explains its diversion from older consumers. (Their mortgage rates are likely higher as well, meaning that their equity is building more slowly.) Meanwhile, older consumers may have designs on downsizing to another residence instead of remodeling, which means less demand for HELOCs from these borrowers than others.
HELOC balances were up in all states—not surprising considering the 6.3% increase nationwide. Double-digit percentage jumps were observed in a grab bag of less populous states.
Experian
8 / 8Apart from North Carolina, the 10 states where HELOC balances grew the most don't have major metros. However, although these states grew their balances substantially, all those current HELOC balances (except Wyoming) are still below the $45,000 national average.
Despite three recent Federal Reserve rate cuts that together comprised a 1 percentage point reduction, mortgage rates remain markedly elevated over pre-pandemic levels. Several more rate cuts have been signaled for 2025, but heightened rates could keep driving interest in HELOCs as long as they exceed those on existing mortgages.
"HELOCs tend to be popular in times like now when prevailing interest rates are higher than a homeowner's first mortgage rate," says Allen. This trend of higher mortgage rates hasn't presented itself to homeowners until recently, when the Fed rate was aggressively hiked in spring 2022.
Allen also notes that HELOC processing and underwriting has been improving.
"Historically, HELOC lending was modeled after first mortgage processes, which included lots of manual steps in underwriting and slower approval timelines," she says. "As traditional lenders have improved their first mortgage processes, HELOC processes have also improved."
Competition from non-traditional lenders like fintechs are also spurring processing times, notes Allen. So not only are HELOC rates currently lower than in 2024, but streamlined processing may help get more homes renovated and more debt consolidated more quickly.
Methodology: The analysis results provided are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database that may include use of the FICO® Score 8 version. Different sampling parameters may generate different findings compared with other similar analysis. Analyzed credit data did not contain personal identification information. Metro areas group counties and cities into specific geographic areas for population censuses and compilations of related statistical data.
