Credit card debt is cutting into homeowners’ savings and household spending, prompting a sizable share to consider using home equity to improve their finances.
A new Newrez survey found that 51% of homeowners carry a credit card balance from month to month. Among homeowners with revolving card debt, 61% said their balances increased over the past year, while 73% said high interest rates made their debt harder to pay down.
The findings point to a potential second-lien market for loan originators: 52% of homeowners carrying credit card debt said they researched debt-consolidation options during the past year, and 42% have considered using their home equity to pay the debt off faster.
That interest comes as lenders compete more aggressively for borrowers who want access to cash without refinancing their entire mortgage at current rates.
Mortgage Payments Remain A Priority
The financial strain has not yet translated into widespread concern about homeowners’ ability to make their mortgage payments.
Among respondents carrying both mortgage and credit card debt, 89% said they were confident they could keep up with their mortgage payments. Ninety percent said they prioritized the mortgage over most other bills.
The pressure is showing elsewhere in household budgets. Seventy-one percent of homeowners carrying card balances said the debt caused them to reduce spending or saving over the past year. That included:
- 41% who reduced travel, leisure, or other discretionary spending;
- 37% who cut everyday expenses such as groceries;
- 36% who reduced savings or emergency-fund contributions;
- 33% who cut spending on home maintenance or improvements;
- 22% who reduced medical or dental spending; and
- 19% who reduced retirement contributions.
More than half, or 51%, said financial concerns caused them to lose sleep, while 67% felt overwhelmed by their finances at least some of the time.
“Homeowners are carrying a heavy financial load right now, but their belief in homeownership hasn’t wavered,” said Leslie Gillin, chief commercial officer at Newrez. “Even with credit card debt weighing on them, they’re focused on protecting their home and taking steps to improve their financial outlook.”
Second Liens Gain Ground
The survey arrives as both credit card and home equity line balances continue to climb.
U.S. credit card balances increased by $21 billion during the second quarter to $1.26 trillion, according to the Federal Reserve Bank of New York. HELOC balances increased by $13 billion to $459 billion, marking the 17th consecutive quarterly gain.
The mortgage industry is seeing that shift in production. Second-lien lending reached an 18-year first-quarter high in 2026, with HELOCs and other second liens accounting for 54% of equity withdrawals, according to ICE Mortgage Technology data.
Recent product activity shows lenders pursuing that demand. PremierOne Credit Union introduced home equity products offering up to 100% combined loan-to-value in California, while other lenders have raised home equity limits, broadened borrower eligibility, or added second-lien capabilities to mortgage-origination systems.
For originators, the Newrez findings identify a possible need among existing homeowners before they actively shop for a mortgage product. Borrowers may be current on their mortgages while high-rate revolving debt quietly reduces their savings, discretionary income, and capacity to absorb another financial setback.
Consolidation Carries Tradeoffs
Homeowners familiar with debt-consolidation products generally viewed personal loans and home equity loans as the most effective options, with 71% describing each that way. Sixty-nine percent said the same about HELOCs.
Newrez illustrated the potential savings through a personal-loan calculation rather than a home equity product. It estimated that moving an average credit card balance of $6,519 to a three-year personal loan carrying a 12.41% rate would require payments of approximately $218 a month and generate about $1,322 in interest.
Paying the same amount monthly on a credit card carrying a 19.57% rate would take approximately 42 months and cost about $2,494 in interest, according to the company’s calculation. The rates were Bankrate averages as of July 1, while the balance was based on TransUnion’s first-quarter average.
Moving credit card balances into a HELOC or home equity loan can reduce the interest rate without disturbing an existing first mortgage. It also converts unsecured debt into debt secured by the borrower’s home, creating foreclosure risk if the homeowner cannot make the payments. Extending repayment over a longer term can also increase the total interest cost even when the monthly payment declines.
