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Home equity levels are at an all-time high—so what do consumers really think about tapping into the value they’ve built? MeridianLink® surveyed homeowners nationwide to uncover their perspectives, preferences, and priorities. Here’s a sneak peek at the responses, the opportunities, and how you can capture this market. For more on this topic, download the full report.
Record home equity, reluctant borrowers.
Over the past five years, home values in the U.S. have surged dramatically. According to Redfin, median home prices have risen by more than 42% since 2020. Tight inventory continues to drive those prices even higher. Homeowners who locked in historically low mortgage rates during the pandemic are now reluctant to sell in today’s higher-rate environment. This so-called “golden handcuff” effect has significantly limited the number of homes on the market. And in turn, has sent homeowner equity levels to record highs.
As of April 2025, U.S. homeowners held a collective $35 trillion in home equity, according to the Federal Reserve—an all-time high. And with inflation and living costs still weighing heavily on household budgets, many are increasingly viewing home equity as a potential financial resource. Home equity loans and Home Equity Lines of Credit (HELOCs) have re-emerged as popular tools for funding major expenses like home renovations, debt consolidation, and even unexpected medical bills.
Yet despite this growing interest, a large number of homeowners remain hesitant to borrow against their homes. Many are unsure how home equity products work or if they qualify. Others worry about higher interest rates. Some are concerned about overleveraging what may be their biggest financial asset.
This gap between equity potential and borrowing confidence presents both a challenge and an opportunity for lenders. As homeowners look for ways to navigate financial pressures, access to clear information, modern lending experiences, and transparent terms will be key in helping them tap into the value they’ve already built.
What’s motivating borrowers to consider home equity loans?
According to the results from MeridianLink’s Nationwide Consumer Survey, 28% of homeowners are somewhat or very likely to take out a home equity loan this year, up from 21% in 2022. Still, with fewer than three in ten even considering this move, it’s important for lenders to understand the reasons for hesitation, which include high interest rates (63%), fear of risking home ownership (22%), and uncertainty about repayment terms (18%).
One thing is certain: there is a need for better education on home equity loan options. Lenders that combine the power of the right technology with a consultative approach are better equipped to deliver meaningful, customized borrower experiences. Streamlining the lending process yields stronger engagement, increased conversions, and long-term growth.
Despite these hesitations, some borrowers are finding compelling reasons to pursue HELOCs in today’s market. For those who are moving forward, the decision is often rooted in practicality. Whether it’s funding home improvements (45%), consolidating high-interest debt (16%), investing in new properties (16%), creating an emergency fund (11%), or covering major life expenses like medical bills (5%), these borrowers see a HELOC as a flexible financial tool—not a speculative move. That said, they’re counting on lenders to make the experience as seamless and accessible as possible.
What drives borrowers to choose a lender?
As borrowers weigh their options, certain lender traits rise to the top. Competitive interest rates (72%), reputation (43%), and convenience and personalization (41%) are consistently cited as key decision drivers—especially in a financial environment where affordability and confidence matter more than ever.
But in today’s market, borrowers aren’t just looking for access to funds—they’re looking for trust, responsiveness, and digital simplicity. Specifically, borrowers are drawn to speed of approval and funding (15%), personalized service and guidance (15%), and digital tools and ease of application (11%). The lenders who can deliver competitive rates along with a streamlined, consumer-centric experience are more likely to win their business.
Borrower education is key.
Homeowners are becoming more informed about how home equity loans work, but education gaps still remain. For example, more than half (53%) of homeowners now rate their understanding as strong, up from 43% in 2022. Yet, nearly a quarter (23%) still report an incomplete understanding, though this number has improved from 38% in 2022. Many are just beginning to realize how this financing tool can fit into their broader financial strategy, with 16% of homeowners saying they would be more likely to apply for a home equity loan if they had better education on products and repayment structures.
Lenders have an opportunity to be the guiding light borrowers seek. They can foster trust by offering clear, accessible resources that transform hesitant homeowners into confident borrowers.
Affordability, flexibility, responsiveness underpin lender growth
Borrowers have not been bashful in conveying what they want: better rates (68%), more flexible repayment options (36%), and an easier application process (18%). Lenders who can compete on all three—a feat best supported by the speed and scalability of digital applications—will be better positioned to capture growth.
The home equity market is a growing opportunity for lenders who are ready to meet the demand. To test your readiness, consider the following key questions:
- Are you leveraging automation and instant decisioning rules to process home equity loans faster, minimize human error, and improve credit risk assessments?
- Do you have the tools in place to provide borrowers with real-time loan status updates and clear, transparent communication throughout their journey?
- Is your technology enabling you to provide personalized support and debt optimization solutions tailored to each borrower’s unique needs?
MeridianLink helps you confidently answer “Yes.”
With over 25 years of expertise, MeridianLink is here to help you operationalize these new and exciting opportunities. Specifically, our lending technology, automation, and data-driven insights help you:
- Simplify application processes to speed up approval times and reduce errors.
- Enable faster time to fund through automated decisioning and workflows.
- Leverage data-powered credit risk assessments to make more informed lending decisions.
- Offer integrated debt optimization to help borrowers manage their financial needs with personalized solutions.
- Provide real-time, personalized borrower engagement that keeps your customers informed and satisfied.
- Benefit from cloud-based, scalable technology that grows with your business.
Download the full Home Equity Lending Report for more trends, takeaways, and tactical tips.
