Americans have more accessible home equity than ever, but the amount tied to below-market mortgage rates is beginning to decline, offering an early indication that the financing tradeoffs facing homeowners are shifting.
U.S. accessible home equity reached a record $13.2 trillion in the second quarter of 2026, up 1.5% from a year earlier, according to a new report released Wednesday by First American Data & Analytics. Of that total, $11.6 trillion, or 88%, belonged to homeowners whose first-mortgage rates were below the prevailing market rate.
Yet locked-in accessible equity fell 2% year over year, even as total accessible equity increased. The divergence suggests the mortgage rate lock-in effect is gradually changing, although the overwhelming majority of equity remains associated with below-market first mortgages.
For mortgage originators, the more consequential finding is how unevenly that shift is occurring.
Most Equity Remains Deeply Locked In
Approximately $9.64 trillion, or 83% of locked-in accessible equity, was classified as extremely rate-locked, meaning homeowners held first mortgages more than 150 basis points below the prevailing 6.49% rate at the end of June.
That category declined 4% from a year earlier but still accounted for the vast majority of locked-in equity.
Meanwhile, equity in the least restrictive category — mortgages carrying rates no more than 50 basis points below the benchmark — increased 25% year over year to $929 billion.
The combined share of locked-in equity in the low- and moderate-severity categories also increased, from approximately 10% at the end of 2025 to 13% in the second quarter.
“Approximately 83 percent of locked-in accessible equity remains in the extreme category, meaning it is held by homeowners whose mortgage rates are more than 150 basis points below the prevailing rate,” said Genaro Villa, senior economist at First American Data & Analytics.
“For lenders, that concentration underscores the relevance of financing options that allow homeowners to access equity without replacing a low-rate first mortgage,” he added.
A More Divided Cash-Out Market
The findings add another dimension to the shift toward second-lien lending already underway.
HELOCs and other second liens accounted for 54% of equity withdrawals in the first quarter, according to ICE Mortgage Technology. Nearly two-thirds of second-lien originations came from borrowers who obtained their first mortgages between 2020 and 2022.
First American's latest data suggest that while preserving low-rate first mortgages remains a powerful incentive, the economics of accessing equity are not uniform across borrowers.
For homeowners with deeply discounted first-mortgage rates, a second lien may remain more attractive than replacing the entire mortgage balance. But for borrowers whose existing rates are closer to prevailing rates, cash-out refinancing could become more competitive, depending on borrowing needs, pricing, and total financing costs.
That distinction is particularly relevant as originators evaluate opportunities beyond traditional purchase and rate-and-term refinance business.
Still, the report captures conditions through June, before mortgage rates climbed above 7% in October. As NMP reported last week, nearly half of outstanding mortgages carried rates below 4% in the second quarter, underscoring the persistence of the broader lock-in effect.
Geography Adds Another Divide
The degree of lock-in also varies considerably across markets.
South Dakota had the highest share of locked-in accessible equity at 98%, followed by Washington at 93.3% and Wisconsin at 92.4%. Connecticut had the lowest share at 74.6%, followed by Massachusetts at 76.7% and Rhode Island at 77.7%.
California, meanwhile, dominated the markets with the greatest locked-in accessible equity per eligible property. San Jose led at approximately $899,000, followed by San Francisco at $597,000, Los Angeles at $553,000, and San Diego at $514,000.
The figures point to different market-level opportunities for lenders, although the amount of estimated equity does not necessarily translate into borrower demand or loan eligibility.
First American defines accessible equity as the amount potentially available while maintaining a combined loan-to-value ratio of no more than 80%.
The report does not measure actual borrowing decisions, and the decline in locked-in equity does not establish that more homeowners are refinancing or tapping their equity.
Nevertheless, the emerging shift in lock-in severity suggests that the opportunity is becoming more segmented. For originators, the distinction increasingly lies not simply in identifying homeowners with equity, but in determining when preserving an existing first mortgage still outweighs the economics of replacing it.
