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Seventy percent of homeowners who pulled cash out of their properties in the second quarter of 2025 accepted a higher interest rate to do it, at an average increase of 1.45 percentage points. Equity has sat at record levels for years without owners rushing to borrow against it, which makes the timing the question worth asking.
Mortgage Holders Entered Q3 2025 With $11.6 Trillion in Borrowable Equity
U.S. mortgage holders held a record $17.8 trillion in total home equity entering the third quarter of 2025, according to ICE Mortgage Technology. About $11.6 trillion of that qualified as tappable, meaning it could be borrowed against while leaving a 20% cushion intact. Roughly 48 million mortgage holders had tappable equity, and the average one was sitting on $213,000 of it.
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Those totals climbed for years while withdrawal rates stayed subdued, so the stockpile alone does not account for the activity.
Cash-Out Refinances Made Up 59% of Refinance Volume
Cash-out refinances accounted for 59% of all refinance transactions in the second quarter of 2025. Borrowers who took the higher rate pulled out an average of $94,000, and their monthly payments rose by roughly $590.
That trade costs money twice, once on the new balance and again on every dollar already borrowed at a lower rate. What on the monthly statement makes it worth doing?
Los Angeles Premiums Rose 19.5% Year Over Year
Property insurance costs climbed about 70% over five years, far outpacing growth in principal, interest, and property taxes, and California posted the sharpest first-half increases in the country. Premiums in Los Angeles rose 9% in six months and 19.5% year over year, per the September 2025 ICE Mortgage Monitor, with wildfire exposure cited as a driver. San Diego, Oxnard, Bakersfield, Riverside, and San Francisco each posted first-half increases above 8% and annual jumps between 15.9% and 19.9%.
A Los Angeles homeowner can gain several hundred thousand dollars on paper and still open a renewal notice that resets the monthly cost of staying put.
Second-Lien Withdrawals Hit $25 Billion, the Largest First Quarter in 17 Years
Second-lien equity withdrawals rose 22% year over year to nearly $25 billion in the first quarter of 2025, the largest first-quarter volume in 17 years. Borrowing costs helped: The monthly payment needed to withdraw $50,000 through a home equity line fell from $412 in early 2024 to $311 by the end of that quarter.
Second liens leave the original mortgage alone. That is the whole appeal. A homeowner carrying a 3% first mortgage who refinances the entire balance to access cash pays the new rate on every dollar, including the dollars already borrowed cheaply. Borrowing behind that first mortgage keeps the low rate where it is.
Second-Position Loans Skip the Income Documentation Requirement
Conventional cash-out programs require income documentation that self-employed owners and retirees with variable income often cannot satisfy, even when the property carries far more equity than debt. Asset-based lending underwrites the collateral instead. For owners weighing Los Angeles cash-out and second-mortgage options, a second-position loan written against the property can free up equity without disturbing the first lien or the rate attached to it, and similar structures are available through San Diego hard money lenders elsewhere in the state.
Insurance Now Accounts for 9.6% of the Average Monthly Payment, a Record Share
Property insurance makes up 9.6% of the average monthly mortgage-related payment when principal, interest, taxes, and insurance are combined, the highest share ICE has recorded, at roughly $2,370 a year. Its five-year growth of nearly 70% ran close to triple the 23% rise in principal and the 27% increases in interest and property taxes.
Premium growth at that pace moves independently of Fed policy. If California pricing holds, second-lien volume in the state may track carrier rate filings and non-renewal decisions more closely than it tracks mortgage rates through 2026, and the monthly ICE reports are where that divergence will show up first.
