ICE Mortgage Monitor: Lock-in effect drives surge in home equity lending

Homeowners tapped their housing wealth at the fastest pace for any first quarter in four years as more borrowers turned to home equity loans and lines of credit instead of refinancing their existing mortgages, according to Intercontinental Exchange (ICE)’s June 2026 ICE Mortgage Monitor report.

The June report, released Monday — which tracks delinquency and foreclosure trends through the end of April — found that homeowners withdrew an estimated $47 billion in equity during the first quarter, up 2% from a year earlier and the highest first-quarter total since 2021.

ICE said that trend was driven by second-lien loans, which reached their strongest first-quarter volume in almost 20 years. About 248,000 borrowers tapped home equity through second-lien loans and lines of credit during the quarter, withdrawing roughly $25 billion. Another 234,000 homeowners completed cash-out refinances, extracting approximately $22 billion.

“The housing market continues to be defined by the lock-in effect,” Andy Walden, head of mortgage and housing market research at ICE, said in a statement. “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.”

Second liens grow in popularity

Borrowers who obtained mortgages during the low-rate years of 2020 through 2022 accounted for nearly two-thirds of all second-lien originations in the first quarter of 2026. According to the Mortgage Monitor report, an estimated 3.9 million homeowners with primary mortgages originated during that period now also carry a second lien.

The trend comes as home equity products become increasingly attractive relative to traditional refinancing options. ICE reported that the average introductory rate on second-lien HELOCs fell to 6.6% in March, the lowest level since late 2022. At that rate, a homeowner could borrow $50,000 of their home equity for a monthly payment of about $275, down sharply from more than $400 in early 2024.

At the same time, higher mortgage rates have dampened refinancing opportunities. The number of homeowners with a financial incentive to refinance fell to roughly 1.8 million in May, down from a peak of 5.4 million in late February when mortgage rates briefly dipped below 6%.

Since then, rates have risen about 50 basis points amid stronger-than-expected economic data, persistent inflation concerns and shifting expectations for Federal Reserve policy. Average rates for 30-year mortgages climbed as high as 6.6% in May, their highest level since last summer.

While the increase has eroded some affordability gains made earlier this year, housing affordability remains improved from a year ago, according to ICE.

Purchasing the average-priced home now requires 29.8% of median household income, down from 31.6% a year earlier. Homebuyers also have about 3% more purchasing power than they did last May, and the monthly payment on an average-priced home remains about $48 lower than a year ago.

Affordability pressures continue to weigh on some prospective buyers, with ICE identifying that the share of purchase mortgage rate locks going to first-time homebuyers fell to its lowest level in nearly a year and a half, while average borrower credit scores increased.

Annual home price growth accelerated to 1% in May, marking the third consecutive month of gains. Nearly 70% of major housing markets posted annual price increases, the largest share since July 2025, while almost 90% recorded month-over-month appreciation on a seasonally adjusted basis.

Northeastern markets led annual price growth, with Scranton, Pennsylvania; Rochester, New York; and Bridgeport, Connecticut posting some of the strongest gains. Several formerly high-flying Sun Belt markets, including Cape Coral, Florida, and Austin continued to see annual price declines.

“As refinance opportunities become more limited, home equity products are playing a larger role in helping homeowners access liquidity and meet financial goals,” Bob Hart, president of ICE Mortgage Technology, said in a statement.

Delinquencies hold steady in April

The report found that the national delinquency rate held steady in April at 3.35%. ICE observed that delinquency levels are 45 bps below pre-pandemic benchmarks set in January 2020, but are up 13
bps from the same period last year.

The increase, ICE said, is driven by a rise in serious delinquencies — which despite a seasonal decline in April are up 21%, or 101,000 loans, from year-ago levels. The rise is largely attributable to Federal Housing Administration loans, where serious delinquencies are up 105,000 from a year ago.

Early-stage delinquencies, however, are down 5,000 over the same period.

General foreclosure starts reached 37,000 in April, up 26% from a year ago and the highest April count since 2019. But start volumes remain 19% below 2019 levels.