as home prices soared in recent years homeowners enjoyed record levels of tappable home equity which is the amount of money a homeowner can borrow against while keeping a 20 equity stake but that’s all changing as home prices begin to fall with july seeing the largest decline in home prices since 2011 according to real estate data and analytics company black knight’s most recent mortgage monitor see the lowest rates home equity rates you may qualify for here indeed while tappable equity hit another record high in the second quarter of the year its growth appears to have peaked “while mortgageholders’ tappable equity had grown 25 from last year to hit another record high in q2 we noted that equity actually peaked in may and tracked the pullback that began in june before escalating in july” says ben graboske president of black knight data  analytics “tappable equity is now down 5 in the last two months setting up q3 to likely see the first quarterly decline in tappable equity since 2019” in some markets this drop in tappable home equity is especially acute five of the most equityrich west coast markets saw tappable equity decline by 10 to 20 from april to july here’s how large the declines in tappable equity were in the 10 most equity rich markets meanwhile among the 50 most equity rich markets here’s what happened with tappable home equity one big reason why tappable equity is down is of course that home prices are down but it’s also likely that rising interest rates are to blame for how much equity is being withdrawn as rising rates change how homeowners tap their equity homeowners had previously taken advantage of lower rates to take out helocs and home equity lending was up nearly 30 quarter over quarter the largest volume in almost 12 years what to consider if you’re thinking about taking out a heloc helocs tend to be a far more affordable way to borrow money than either credit cards or personal loans particuarly for homeowners with significant equity in their homes and they can be a smart option for borrowers looking to consolidate highinterest debt or fund home improvement projects but it’s important to get your finances in order your credit score as high as possible and to shop around for rates see the lowest rates home equity rates you may qualify for here it’s also important to understand how helocs work too they are composed of a twopart structure which is usually a 10year draw period and a 20year repayment period which together equal a 30year term during the draw period borrowers can withdraw as much or as little money as they like but once the repayment period begins money can no longer be withdrawn and the borrower begins to pay back the principal in addition to interest because helocs are based on the amount of equity someone has in their home the amount of money a borrower qualifies for will vary remember that helocs tend to have variable rates which might start out low but could increase if rates rise and because you’re using your home as collateral to take out a loan like this you risk of losing your home if you’re unable to make your scheduled payments