Homeowners are turning to home equity products instead of refinancing their first mortgages, driving second-lien lending to its strongest first-quarter performance in nearly two decades, according to Intercontinental Exchange's (ICE) June 2026 Mortgage Monitor report.
The report found that equity withdrawals rose 2% year over year in the first quarter, reaching their highest first-quarter level since 2021. More than half (54%) of all equity extraction came through second liens, including home equity lines of credit (HELOCs), as borrowers continued to preserve historically low first-mortgage rates.
"The housing market continues to be defined by the lock-in effect," said Andy Walden, head of mortgage and housing market research at ICE. "Millions of homeowners are sitting on first mortgages with rates well below current market levels, making second liens and HELOCs an attractive way to access equity without giving up those loans."
While refinance opportunities remain limited, many borrowers are still seeking to tap accumulated home equity without replacing the low-rate mortgages they secured during the pandemic-era rate cycle.
According to ICE, nearly two-thirds of all second-lien originations in the first quarter came from borrowers who originated their primary mortgages between 2020 and 2022. The company estimates that 3.9 million homeowners who took out first mortgages during that period have since added a second lien.
Cash-out refinances also increased, reaching their highest first-quarter withdrawal levels since 2022. However, cash-out refinance activity reflected a broader mix of borrowers, with nearly half of originations coming from homeowners who obtained their mortgages in 2023 or later and roughly one-quarter coming from 2020-2022 vintages.
Lower HELOC Rates Spur Demand
ICE pointed to declining HELOC rates as another factor driving demand for home equity products.
Average second-lien HELOC rates fell to 6.6% in March, their lowest level since late 2022. At that rate, ICE estimates a borrower could access $50,000 in home equity with a monthly payment of approximately $275, significantly lower than similar borrowing costs in early 2024.
The report also found that average introductory HELOC rates dipped slightly below the prime rate, a sign of increasingly aggressive competition among lenders seeking home equity business.
"As refinance opportunities become more limited, home equity products are playing a larger role in helping homeowners access liquidity and meet financial goals," said Bob Hart, president of ICE Mortgage Technology. "Lenders that can effectively identify, engage and serve those borrowers across both mortgage and home equity channels will be best positioned to capitalize on evolving consumer demand."
Affordability Remains Improved From Year Ago
While the report focused heavily on home equity trends, ICE also noted that affordability remains better than a year ago despite a recent increase in mortgage rates.
Mortgage rates have risen roughly 50 basis points since February, reversing some of the affordability gains seen earlier this year. Even so, homebuyers still have about 3% more purchasing power than they did a year ago, according to ICE.
The monthly payment on an average-priced home remains $48 lower than it was in May 2025, while purchasing that home now requires 29.8% of median household income, down from 31.6% a year earlier.
Home Price Gains Become More Widespread
ICE also reported increasingly broad-based home price growth across the country.
Nearly 70% of major housing markets posted annual home price gains in May, the largest share since July 2025. Almost 90% of markets recorded seasonally adjusted month-over-month appreciation, the strongest reading in two years.
The gap between the nation's strongest and weakest housing markets has narrowed to one of the smallest levels on record, suggesting home price performance is becoming more synchronized across regions. Northeastern markets continue to lead annual appreciation, while several formerly fast-growing Sun Belt markets remain under pressure.
