How much higher will home equity levels rise? Here's what experts predict.
The average homeowner currently has $313,000 of equity in their home, according to the March 2025
Intercontinental Exchange (ICE) Mortgage Monitor report
. While home equity levels are slightly down compared to what they were a few months ago, they're still up
6% year-over-year
.
As inflation persists and the cost of living rises, home equity increases have some baked-in benefits. Namely, borrowing through a
home equity loan
or a
home equity line of credit (HELOC)
becomes more feasible. But are home equity levels going to rise further in 2025, opening the door to more borrowing power — and higher possible home equity loan and HELOC limits? We spoke with home lending experts for their insights and predictions.
Find out how affordable a home equity loan or HELOC could be today
.
By the end of 2024, U.S. homeowners had nearly $35 trillion in
home equity
, according to data from the
Federal Reserve Bank of St. Louis
. While there was a slight decline from Q2 2024, it's a major increase from the beginning of 2020 when home equity levels were around $20 trillion.
Over the past five years, home values have increased at a rapid pace — which also spiked home equity levels. The past year and a half to two years, though, there's been a "leveling off of that rapid increase," says Jeff Ruben, president of WSFS Mortgage. But while there's been a cooling-off period, home values have remained relatively steady.
"We don't see the same kind of month over month or quarter over quarter increase in home values…after such a rapid run-up during COVID of values, I think we, as the market, were anticipating that there would be some retrenchment or retreating of values once the Fed started rapidly increasing rates after COVID and that just didn't happen," Ruben says.
The rise in home values
during the pandemic was nothing short of remarkable. Now that the exceptional increase is cooling off, though, will home equity continue to increase or hold steady?
Home equity levels may continue to rise further this year, experts say. But don't expect it to be close to the same levels we've seen over the past few years.
"I do think we'll see some modest increases in values of homes over the next quarter and hopefully before the end of the year, but I don't see anything like 8% or 10%. I think it's going to be somewhere around 5% or so," says Jordan Heatherly, a mortgage loan originator at Churchill Mortgage.
Many factors affect home appreciation
and therefore home equity levels. Not all homeowners can expect to see their home values go up or by the same amount. Location can play a role in whether the value of your home goes up or down.
"You can't just say a blanket statement across the country that all home values are going to go up. But I think on average, we're going to see an increase in values," says Heatherly.
Another expert we spoke to held a different view.
"Real estate values are stable-to-down at the moment. Until such time that real estate values begin to increase again, home equity levels will not increase," says Melissa Cohn, regional vice president of William Raveis Mortgage.
Ultimately, where home equity levels land this year depends on your specific location, market conditions and other factors.
Compare your home equity borrowing options and lock in a rate now
.
Some key factors that affect home equity levels include:
Whether your home equity will rise throughout 2025 depends on numerous factors. According to the experts we spoke to, you can likely expect home equity levels to remain steady or have a modest increase. But that may not be the case everywhere. In this environment, you can take advantage of the home equity you have.
"Having equity in your home can be a great tool if you have other debt or if you have work that needs to be done on your home," says Heatherly.
Compared to other types of consumer debt, these home equity borrowing products typically offer
lower interest rates
. You have different options to choose from, too.
"A home equity loan, or HELOC, is the best way to tap the existing equity in your home. A HELOC gives you the most flexibility, as it is a line of credit that you can use, repay, and borrow against once again," says Cohn.
Home equity loan interest rates are typically fixed, so you can lock in a rate before it changes. HELOC interest rates are variable, so you can benefit if rates drop. Before making any moves with home equity borrowing, assess your financial needs and goals. Compare options with multiple home equity lenders and make sure you can comfortably afford repayment.
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