Average HELOC Balances up 2.7% in 2023

Quick Answer

The average HELOC balance rose to $42,139 in the third quarter of 2023, up 2.7% from the $41,045 average a year prior.

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One thing that continues to work on behalf of many homeowners is the equity in their home. Residential real estate has appreciated by $15 trillion, to more than $58 trillion, since 2020, according to the Federal Reserve. Meanwhile, homeowners steadily paying down their mortgages have been accumulating equity even faster than in previous years.

Many homeowners could use the win, as the cost of other goods and services continues to fluctuate and bigger-ticket items, like new cars, insurance premiums and renovation costs, are climbing nearly as fast as home prices.

As home values increase, more homeowners are leveraging some of that newly won wealth in the form of home equity lines of credit, or HELOCs. By borrowing some of the value of a home, homeowners are able to make home improvements or consolidate, pay down or pay off higher-interest debts. In 2023, the average HELOC balance grew 2.7% to $42,139, and more than $20 billion was added to the total HELOC debt across all U.S. consumers.

As part of our continuing coverage of consumer credit and debt, we looked at anonymized Experian credit data to observe recent trends in the home financing market, including HELOCs.

Total HELOC Balances Increased 6.6% in 2023

Overall, HELOC debt nationwide increased by 6.6% in 2023, the second consecutive year that HELOC balances have grown.

Snapshot: Total HELOC Debt
2021 2022 2023 2022-2023 Change
$295.5B $305.9B $326.1B +6.6%

Source: Experian data from the third quarter (Q3) of each year

It wasn't always like this, however. The way homeowners have gone about tapping their home equity has evolved from the 2010s, when mortgage refinancing rates bumped along the 3% to 4% APR range. Back then, the go-to move was to refinance an existing mortgage with a larger loan (often with a lower APR) and cash out any additional funds, which also get paid back through that shiny new mortgage.

Throughout the 2010s, interest in HELOCs waned as banks preferred to offer more lucrative mortgage refinances to homeowners. Refinancing proved to be a win-win situation for banks as well as their customers: Banks wrote lots of new fee-generating mortgages, and homeowners got either a low-interest loan through a cash-out refinance, a lower monthly payment or, in many cases, both.

But with mortgage rates these days moving between 6% to 7% instead of 3% to 4%, that math no longer works. Instead, more homeowners are using HELOCs to leverage their home equity.

The renewed interest in HELOCs now is evident, with consumer interest in mortgage refinancing largely disappearing as few homeowners with mortgages are able to refinance at lower rates. To borrow against existing equity without refinancing, homeowners must rely on either home equity loans or HELOCs.

Home equity loans are the lump-sum solution: Homeowners borrow a specific amount at a fixed interest rate and repay the loan just like an installment loan. HELOCs provide a line of credit that's there when you need it, and can be repaid over a number of years.

Snapshot: Average HELOC Balance
2021 2022 2023 2022-2023 Change
$39,556 $41,045 $42,139 +2.7%

Source: Experian data from Q3 of each year

What You'll Need for a HELOC (Besides Equity)

A HELOC is a line of credit secured by the equity a homeowner has in a property. HELOC lenders allow homeowners to tap up to a certain percentage of the paid-off portion of their mortgage. For example, someone who has a home valued at $400,000 with $100,000 remaining on their mortgage may be able to tap up to 80% of that equity—$240,000—in the form of a HELOC.

Most homeowners don't borrow all that they're eligible for. Across the U.S., average HELOC limits range from $75,000 to $175,000. But homeowners usually borrow roughly one-third of their HELOC limit from those lines of credit, an amount that roughly mirrors the cost of major home renovations—between $19,000 and $85,000, according to home services website Angi. In addition, according to Experian data, many homeowners (about half) have a home equity line of credit with a $0 balance but keep the HELOC in place for future financing needs.

Would-be HELOC borrowers need to meet certain requirements before their line of credit can be approved. Lenders want to see that the borrower's income is enough to cover their existing debts, including any borrowings from a HELOC. Lenders determine this by calculating the borrower's debt-to-income ratio (DTI). Most lenders are looking for a DTI under a certain level (often 43%). Also, one's credit history and credit score will also be considered, just as with a mortgage application.

HELOC Credit Limits Are up in 2023

The average credit limit for HELOCs in 2023 was $117,598, which is 1.7% higher than 2022's average limit of $115,650. Based on the 2023 average HELOC balance of $42,139, homeowners with HELOC balances are collectively using about 36% of their lines of credit.

Average HELOC Limits, 2023

Comparing states with higher and lower HELOC credit limits, we can see that limits are more than twice as high in California and Hawaii than lower-limit states like Indiana and West Virginia. This more or less mirrors the average home price differences among the states.

Younger Homeowners More Likely to Be Tapping Home Equity

At first glance, the table below couldn't be more clear about which generations have been tapping home equity more. Homeowners born in 1965 or later have higher average balances than baby boomers or the Silent Generation, whose balances are lower than they were in 2022.

Average HELOC Balance by Generation
Generation 2022 2023 Change
Generation Z (18-26) $37,756 $40,608 +7.6%
Millennials (27-42) $46,232 $48,773 +5.5%
Generation X (43-58) $48,509 $51,070 +5.3%
Baby boomers (59-77) $38,162 $37,487 -1.8%
Silent Generation (78+) $32,719 $31,654 -3.3%

Source: Experian data from Q3 of each year; ages as of 2023

While household makeup explains much of the disparity in balances—younger homeowners who are building a family and updating their home to accommodate it versus older empty-nesters—there are other considerations. Reverse mortgages, for instance, are an alternative to HELOCs and other types of mortgage-based loans, but are only available to homeowners ages 62 or older who have paid off most or all of their mortgage.

According to Susan Allen, senior vice president of mortgage at Experian, HELOC usage is up in the past year among recent borrowers.

"We are seeing HELOC line utilization, the amount drawn against the open line, increasing over the last 12 months," Allen says. "Interestingly, 80% of consumers who originated their HELOC in the last two years have drawn on their lines, compared with only 62% of consumers with older HELOCs."

She adds that while not all newer loans are for younger borrowers, that there is some correlation between loan age and homeowner age.

HELOC Balances Climb in Most States

Average outstanding HELOC balances are higher in 45 states and the District of Columbia in 2023.

Average HELOC Balances, 2023

Average HELOC Balance by State
State 2022 2023 Change
Alabama $34,304 $36,330 +5.9%
Alaska $40,500 $41,053 +1.4%
Arizona $45,553 $47,247 +3.7%
Arkansas $35,140 $37,016 +5.3%
California $61,291 $61,084 -0.3%
Colorado $47,255 $52,232 +10.5%
Connecticut $45,916 $45,193 -1.6%
Delaware $40,888 $41,769 +2.2%
District of Columbia $69,278 $74,697 +7.8%
Florida $47,458 $48,600 +2.4%
Georgia $39,771 $42,338 +6.5%
Hawaii $73,915 $84,070 +13.7%
Idaho $43,131 $44,487 +3.1%
Illinois $34,304 $34,301 0%
Indiana $27,284 $28,524 +4.5%
Iowa $25,313 $27,246 +7.6%
Kansas $25,324 $26,867 +6.1%
Kentucky $30,269 $31,709 +4.8%
Louisiana $40,890 $42,019 +2.8%
Maine $29,772 $31,019 +4.2%
Maryland $41,943 $42,547 +1.4%
Massachusetts $48,997 $49,872 +1.8%
Michigan $31,231 $31,912 +2.2%
Minnesota $30,083 $31,189 +3.7%
Mississippi $33,539 $34,565 +3.1%
Missouri $28,118 $29,616 +5.3%
Montana $49,875 $50,559 +1.4%
Nebraska $28,102 $29,887 +6.4%
Nevada $49,107 $51,349 +4.6%
New Hampshire $37,853 $39,716 +4.9%
New Jersey $52,656 $52,028 -1.2%
New Mexico $33,114 $35,336 +6.7%
New York $51,169 $50,388 -1.5%
North Carolina $30,910 $33,064 +7%
North Dakota $30,597 $32,725 +7%
Ohio $28,603 $29,021 +1.5%
Oklahoma $37,647 $39,615 +5.2%
Oregon $33,851 $34,910 +3.1%
Pennsylvania $36,725 $37,055 +0.9%
Rhode Island $43,305 $43,978 +1.6%
South Carolina $31,739 $34,334 +8.2%
South Dakota $30,494 $33,214 +8.9%
Tennessee $43,672 $47,210 +8.1%
Texas $53,206 $55,944 +5.1%
Utah $47,823 $51,076 +6.8%
Vermont $31,965 $32,371 +1.3%
Virginia $37,978 $38,885 +2.4%
Washington $48,799 $50,137 +2.7%
West Virginia $28,289 $28,465 +0.6%
Wisconsin $23,058 $24,776 +7.5%
Wyoming $45,613 $48,054 +5.4%

Source: Experian data from Q3 of each year

HELOC balances climbed in most states. Where balances increased the most, there's no apparent throughline: Sparsely populated South Dakota, a pair of Southern states and Hawaii have little in common other than sharply increasing HELOC balances. As for Colorado, homeowners there increased average balances by more than 10% for the second consecutive year. It's a testament to the tight housing market in the state: There are fewer homes to choose from and homeowners are increasingly turning to renovation instead of trading up.

States Where the Average HELOC Balance Grew the Most
State 2022 2023 Change
Hawaii $73,915 $84,070 +13.7%
Colorado $47,255 $52,232 +10.5%
South Dakota $30,494 $33,214 +8.9%
South Carolina $31,739 $34,334 +8.2%
Tennessee $43,672 $47,210 +8.1%

Source: Experian data from Q3 of each year

The states where average HELOC balances declined were among the largest urban centers in the nation: California, Illinois and the states that include the New York metropolitan area saw HELOC balances decline in an otherwise up-balance year.

States Where the Average HELOC Balance Shrank
State 2022 2023 Change
Connecticut $45,916 $45,193 -1.6%
New York $51,169 $50,388 -1.5%
New Jersey $52,656 $52,028 -1.2%
California $61,291 $61,084 -0.3%
Illinois $34,304 $34,301 0%

Source: Experian data from Q3 of each year

HELOCs in 2024: Almost Ready for Prime Time?

With consumer demand for credit not slowing down so far in 2024, why aren't we seeing HELOC offers everywhere?

"Mortgage lenders have been investing heavily in streamlining the HELOC application process," Allen says, citing examples such as AI-powered property valuations, as well as "consumer-permissioned income" and employment verification.

Allen cautions, however, that due to the larger loan amounts and the lien recording involved, borrowers may need to be a bit more patient than they would for a smaller-sized unsecured loan. In exchange for their patience, they'll likely receive a loan rate significantly lower than they would for an unsecured loan. Once a HELOC is issued, she advises homeowners to be "very intentional about HELOC utilization" even as home prices continue to appreciate at historic rates.

"Nobody can predict when prices will level off," she says. "So it is important to not assume that historical price increases will continue indefinitely."

Methodology: The analysis results provided are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database that may include use of the FICO® Score 8 version. Different sampling parameters may generate different findings compared with other similar analysis. Analyzed credit data did not contain personal identification information. Metro areas group counties and cities into specific geographic areas for population censuses and compilations of related statistical data.

FICO® is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.