Americans built up a massive cushion of home value over the past few years. And nearly all of it is just sitting there.

Data firm Cotality found that 97% of the equity homeowners could borrow against stayed untouched in 2025. That's a lot of money sitting idle while borrowing costs slowly come down.

The Demand Is Real - But So Is the Hesitation

Lenders handed out over 653,000 home equity loans worth $40 billion last year. They also greenlit 1.5 million HELOCs - home equity lines of credit - totaling $271 billion.

Those are the biggest numbers the industry has posted since 2023.

So why is 97% of the money still on the table? Part of the answer comes down to math.

Primary mortgage rates are hovering around 6.5%, and millions of homeowners locked in rates well below that during the pandemic boom. Giving up a 3% mortgage to tap equity at 7% or higher doesn't add up for most people.

The Second Mortgage Workaround

That math is exactly what's driving homeowners toward HELOCs and home equity loans - sometimes called second mortgages.

A HELOC works like a credit card tied to your house. You pull money when you need it, return what you've borrowed, and the credit opens back up.

The rate moves around because it's pegged to the prime rate - the base rate banks use for lending - which currently sits at 6.75%.

A home equity loan is simpler. You get one lump sum at a locked-in rate and pay it back over time.

Right now, the national average HELOC rate is 7.20%, according to real estate data firm Curinos. Home equity loans average 7.47%.

Those averages assume a strong borrower profile - a credit score of 780 or higher with less than 70% of the home's value already spoken for.

Watch the Fine Print

Some lenders offer intro rates on HELOCs that look great on paper. One credit union is advertising 5.99% for the first year on lines up to $500,000.

The catch is that rate resets to a floating number after the promo window closes - and it could jump well above 7%.

There's also the upfront withdrawal to watch. Some lenders require you to take a big chunk of cash off the table the moment the deal closes, whether you need it or not.

Bank-based lenders tend to give you more flexibility here.

Worth Noting

The gap between demand and actual usage tells you something about where homeowners' heads are at. They're interested in tapping their equity - but most are still holding back.

With rates at their lowest point in years and home values still high in most markets, that dynamic could shift fast if borrowing costs drop even a little more.

The 97% number won't last forever.