Home Equity Trends for 2026
With 2026 almost upon us, many homeowners are wondering how their home equity is going to look in the new year.
Home equity refers to the difference in the amount your home is currently worth and the amount left you have to pay on your mortgage. In short, home equity is how much of your home you outright own.
Understanding your home equity can be helpful in determining your borrowing power. Your home equity can also be a valuable asset to fund any financial needs you could have when tapped into through a home equity loan or a home equity line of credit (HELOC). Knowing how to use your home equity can prepare you for any 2026 trends you may want to take advantage of.
To start tapping into your home’s equity, you can apply for a HELOC today.
What looks favorable for home equity in 2026
The National Association of REALTORS® (NAR) has made some predictions about the 2026 housing market that look favorable to those interested in using their home equity. In its 2026 Nationwide Forecast, the NAR indicates that 2026 will see a drop in mortgage rates and an increase in median home prices.
The NAR anticipates mortgage rates dropping to 6% in 2026. With rates dropping, this could free up some extra cash for current homeowners. Refinancing your mortgage when rates drop lower than your current mortgage rates could potentially help you save a little money each month*. These extra funds could be put toward paying down your loan’s principal and building your equity quicker.
If median home prices increase in 2026 like the NAR suggests they will, your home equity will increase without you needing to do anything. The NAR predicts a 4% increase in median home prices during the new year.
Are there any risks for equity growth?
One risk homeowners should watch out for regarding equity is the housing market’s volatility.
No one knows exactly what the future of the housing market will look like, so just because it is up now doesn’t mean it will stay up forever. If your home’s value drops after tapping into your equity, you could end up owing more than your house is worth. Keeping track of home values in your area and talking with experts can help you gauge what the market may look like.
Another risk homeowners should watch out for when their equity grows is using their equity for any short-lived expenses. While you can use your home equity to fund a vacation or wedding, these investments don’t have the longer-term returns that home repairs, upgrades or education could bring you.
Are there headwinds for equity growth next year?
The major headwind that could affect home equity growth next year is the market.
If demand for homes in your area cools off next year, your home value could see a slight decline as a result. If your home’s value drops, your equity will decrease as well. However, the NAR predicts a slight increase in median home values for next year.
What do the market predictions mean for me as a homeowner
Current market predictions for 2026 from the NAR look positive for homeowners.
With the NAR’s prediction of home values increasing by 4% next year, your home equity could increase as well. The NAR also believes that mortgage rates will see a slight decrease in 2026. If both these come true, it could make 2026 a great time to tap into your home’s equity.
If you’re worried about waiting too long before tapping into your home’s equity, you can apply for a HELOC and refinance if your home value increases or mortgage rates drop.
How can I start the HELOC process?
You can start the HELOC process by beginning your application today and start accessing your home equity in as little as 10 days**.
A HELOC usually allows you to tap into your home’s equity through a line of credit. You can draw on your credit while only needing to pay interest on the amount you withdraw. After that, you will have to pay back the amount you withdrew and interest.
Getting a HELOC with Rate will give you a lump-sum amount based on needs and your home’s equity. As you pay back this amount, you will have the option to make additional draws.
The HELOC application with us is 100% digital*** and can take as little as five minutes. Start your application today and begin tapping into your home’s equity.
Information provided is for educational purposes only. It should not be construed as financial or legal advice or instruction. Rate does not guarantee or assume liability for the accuracy, completeness or timelines of the information. You should conduct additional research before making any mortgage related decisions.
Applicant subject to credit and underwriting approval. Restrictions apply.
*Savings, if any, vary based on the consumer’s credit profile, interest rate availability, and other factors. Contact Rate for current rates. Restrictions apply.
**Rate cannot guarantee that an applicant will be approved or that a closing can occur within a specific timeframe. All dates are estimates and will vary based on all involved parties level of participation at any stage of the loan process. Contact Rate for more information.
***During Rate's Digital HELOC process, the borrower and/or Rate may need to communicate or facilitate the origination and closing of the borrower’s HELOC using non-digital methods, including but not limited to telephone or letter. There may be instances, due to borrower preference, applicable law, or other reasons, in which HELOC closing must occur in person. Additionally, Rate makes no representations and cannot guarantee that borrower’s HELOC will be serviced by a servicer that maintains an entirely digital process.
