From ocregister.com

America’s homeowners are sitting on a record $36 trillion of total home equity in the second quarter of 2026, according to the Federal Reserve Bank of St. Louis.

The amount of accessible equity hit a record $13 trillion.

California homeowners are sitting on $3 trillion or 23% of the nation’s tappable equity. Breaking it down even further,  Southern California (the counties of Los Angeles, Orange, Riverside, San Bernardino and San Diego) has $1.6 trillion or 12% of the nation’s accessible equity, according to First American Data & Analytics.

Also see: Rent or buy a condo: Which is the better bet in Southern California?

First American’s calculations mean accessible equity is that which can be tapped while keeping the total loan-to-value ratio at 80% or below. That means you have at least 20% equity remaining in the property.

For example, take a home worth $1 million that has a first mortgage balance of $600,000. Eighty percent of the $1 million value is $800,0000. The difference between the $600,000 mortgage balance and the $800,000 is $200,000 of accessible equity.  This means the combined loan-to-value (first mortgage and second lien) is within the 80% definition.

I’ll note that there are mortgage lenders that allow home equity to be accessed up to 95% of the combined loan-to-value ratio.

Using the same $1 million property example from above, a homeowner could access up to $350,000 of equity (plus the $600,000 first mortgage) and be at 95% combined loan-to-value (950,000 divided by $1 million equals 95%).

Also see: Southern California homebuying crashes to 2nd slowest pace on record

For tips on various loan programs and qualifying to access home equity, check out my July 16 column: Creative qualifying tips for fixed-rate second mortgages, HELOCs.

California equity tapping is trending

Statewide home equity line of credit (HELOC) volume soared by 27% in the second quarter, year over year. The origination volume in dollars for this second quarter was $7 billion.

For Southern California, according to First American:

—Los Angeles County, HELOC volume was $1.6 billion a 26% jump year over year

—Orange County was $1 billion and 32% YOY increase,

—Riverside County was $349 million and 17% YOY increase

—San Bernardino County $271,000 million and a 37.4 YOY increase

—San Diego County $688 million with a 9.9% YOY increase.

The origination dollar volume is the recorded HELOC credit limits, not funds initially drawn or outstanding HELOC balances. Also, fixed-rate second mortgages are excluded from this data from First American.

“Southern California is a resilient, highly sought-after housing market, and strong home appreciation has helped homeowners here build substantial equity,” said Genaro Villa, a senior economist on First American’s Data & Analytics team. “In fact, the region accounts for more than one in every 10 dollars of the nation’s accessible home equity.

“So, while current housing market conditions present challenges, accumulated equity gives many SoCal homeowners options and financial flexibility, whether they want to renovate, build an ADU for family or rental income, or create a financial cushion for a major expense,” Villa said.

The lock-in effect drives HELOCs

Across America and California, few borrowers need to give up their low, fixed-rate first mortgage to access their home equity.

As of 2026, Americans owe $13 trillion in mortgage debt with roughly 86 million mortgage loans outstanding, according to a Lending Tree analysis of the New York Fed’s report on household debt.

For all U.S. homeowners, 49% have a first mortgage rate under 4% as of the second quarter, according to an analysis by Realtor.com of the Federal Housing Finance Agency’s national mortgage database.

For California, 60% of approximately 5.7 million mortgages have a rate under 4%, according to a similar study by Startbusinessbystate.com.

“For homeowners considering accessing that equity, the difference between their existing mortgage rate and today’s rates can help guide their financial decisions,” Villa added.

From my seat in the mortgage business, tapping home equity without touching a historically low first mortgage has been a very hot topic among customer queries. Considerations for the cash include paying off credit card debt, retiring high interest rate student loans, home improvement projects and more.

In case of emergency, you should consider taking out a HELOC against your home. Be sure to shop around. You can find them without cost. If you don’t access the funds, you won’t be charged for the credit line. Some lenders may charge annual fees to keep the credit line open, typically in the $350 range.

As an aside, consider the tax deduction opportunities as an added benefit.

“The key point is that the tax treatment of HELOC interest generally depends on how the borrowed funds are used,” said Jeff Hipshman, a certified public accountant and partner at Eide Bailly. “If the proceeds are used to buy, build or substantially improve the home securing the loan, the interest may qualify as deductible home mortgage interest, subject to the applicable debt limits.

“If the proceeds are used for investment or business purposes, the interest may be deductible under the separate investment or business interest rules, depending on the facts and applicable limitations,” Hipshman said.

Freddie Mac rate news

The 30-year fixed rate averaged 7.18%, 8 basis points lower than last week. The 15-year fixed rate averaged 6.6%, 6 basis points lower than last week.

The Mortgage Bankers Association reported a 1.2% mortgage application decrease compared with one week ago.

Bottom line: Assuming a borrower gets an average 30-year fixed rate on a conforming $832,750 loan, last year’s payment was $530 less than this week’s payment of $5,641.

What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages with one point: A 30-year FHA at 6.25 %, a 15-year conventional at 5.99%, a 30-year conventional at 6.625%, a 15-year conventional high balance at 6.25% ($832,751 to $1,249,125 in LA and OC and $832,751 to $1,104,000 in San Diego), a 30-year high balance conventional at 6.75% and a jumbo 30-year-fixed at 6.875%.

Eye-catcher loan program of the week: A 30-year home equity line of credit at prime minus .125 (6.875%) for well qualified borrowers.

Jeff Lazerson, president of Mortgage Grader, can be reached at 949-322-8640 or jlazerson@mortgagegrader.com.

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