Homeowners increasingly turned to HELOCs and second mortgages to access cash without surrendering their low first-mortgage rates, pushing home equity lending to a record share of mortgage transactions in 2025.
Home equity loan volume increased 15% between 2021 and 2025, from 1.28 million to 1.47 million loans, according to a new analysis from real estate data provider Benutech. That growth came as overall mortgage activity fell by more than half and traditional refinance volume dropped nearly 80%.
Equity loans consequently represented 17.52% of all U.S. mortgage transactions in 2025, the largest share recorded in Benutech’s analysis.
The findings illustrate how the mortgage rate lock-in effect is changing the types of loans homeowners seek — and creating sharply different opportunities for originators across the country.
Instead of refinancing an entire mortgage at today’s higher rates, borrowers are increasingly preserving their existing first liens and using HELOCs or closed-end second mortgages to access accumulated equity.
“The ‘Stay-Put’ economy has profound implications for the broader American financial landscape,” said Brian Fox, co-founder and chief revenue officer of Benutech. “As long as the spread between current market mortgage rates and the ‘locked-in’ rates of the early 2020s remains wide, the velocity of housing turnover will remain suppressed.”
Refinances Collapse While Equity Lending Grows
Total U.S. mortgage volume fell from 16.82 million loans in 2021, at the height of the pandemic refinancing boom, to 8.40 million in 2025, according to Benutech. That represents a 50.1% contraction.
Traditional refinance volume recorded an even steeper decline. Lenders originated 8.34 million refinances in 2021, compared with 1.73 million in 2025 — a 79.3% drop.
Home equity lending moved in the opposite direction, although its growing market share also reflects the sharp decline in other types of mortgage activity.
The shift supports other evidence that equity products are becoming an increasingly important source of production for lenders. NMP previously reported that second-lien lending reached an 18-year high as homeowners sought to withdraw equity without refinancing low-rate first mortgages.
Homeowners have also accumulated substantial borrowing capacity. U.S. mortgage holders entered the second quarter of 2025 with a record $17.6 trillion in home equity, including $11.5 trillion considered tappable while maintaining a 20% equity cushion, according to ICE Mortgage Technology.
“Stay-Put” States Lead In Equity Lending
Benutech’s state-level data reveal a divide between markets dominated by existing homeowners and those still generating comparatively strong purchase activity.
Equity products represented 27.74% of all mortgage transactions in North Dakota in 2025, the highest share in the country. Maine followed at 26.55%, Wisconsin at 26.31% and Pennsylvania at 25.96%.
Benutech characterized those states as “stay-put” markets, where borrowers are more likely to remain in their existing homes and borrow against their accumulated equity.
For mortgage professionals, the numbers suggest that HELOCs and closed-end seconds could represent a particularly important source of business in portions of New England, the Midwest and the Rust Belt.
Those products allow borrowers to obtain cash for renovations, debt consolidation or other expenses while preserving the rates attached to their primary mortgages. The data, however, do not identify how borrowers used the proceeds.
Purchase Lending Remains Stronger In The Sunbelt
Purchase mortgages continue to command a much larger share of activity in several Sunbelt markets.
Purchase loans accounted for 53.33% of mortgage transactions in Texas and 49.71% in Florida in 2025, according to Benutech. The company attributed the comparatively high purchase shares to population growth, business relocations and continued demand from incoming buyers.
Texas had an equity loan share of just 7.97%, substantially below the national figure. Benutech said the difference may reflect both the state’s more active purchase market and its constitutional restrictions on home equity borrowing.
The regional divergence presents originators with two distinct markets. In states experiencing stronger household growth and housing turnover, purchase lending remains the larger opportunity. In slower-turnover markets with substantial numbers of rate-locked homeowners, second liens may offer a more productive way to generate business and retain past clients.
