Seventy percent of U.S. mortgage holders have rates below 5%. That freezes the traditional cash-out refi market and opens a door most lenders are ignoring: home equity as a core growth strategy.

The Big Picture

With $35 trillion in tappable equity across U.S. households, second liens have shifted from niche to necessity. Homeowners locked into low rates need liquidity without disrupting their first mortgage. Tom Davis, Chief Sales Officer at Deephaven, calls it "a generational opportunity."

The average U.S. home is 40-50 years old, driving a renovation surge expected to exceed $600 billion in 2026. Add $5 trillion in consumer debt, and equity becomes the go-to liquidity tool for consolidation, business funding, and portfolio expansion. The use cases are broad, but the message is clear: equity is the new refi.

“"More than 70% of borrowers don't return to their original loan officer for their next transaction. That's a massive missed opportunity."”

The macroeconomic backdrop reinforces this trend. The Federal Reserve has kept interest rates at a two-decade high, with the federal funds rate in the 5.25%-5.50% range since July 2023. This has crushed refinance activity: the Mortgage Bankers Association's Refinance Index is down over 70% from its 2021 peak. Meanwhile, home prices continue to climb, with the S&P CoreLogic Case-Shiller Index rising 5.2% year-over-year in Q1 2026. The combination of high rates and rising prices has inflated home equity to record levels, creating a perfect environment for second liens.