"Heading into the summer, consumer spending momentum was very strong, with total credit and debit card spending rising 6.3% year over year in June — the strongest growth in over four years — according to Bank of America internal card data. With gasoline prices falling, the increase in spending growth is almost entirely a discretionary story."
That quote comes from Bank of America's July edition of its monthly Consumer Checkout, the most recent available at the time of writing. Discretionary spending occurs when consumers buy things they want rather than things they need.
However, last month, The New York Times took a more sober view.
"Debt levels have soared in recent years, and saving rates have tumbled," said The Times. "The challenge became even more acute when gas prices jumped this spring, leading inflation to outpace wage growth."
The Home Equity Lifeline
When credit card and other debt gets out of hand, most homeowners have a lifeline. Providing they have sufficient home equity (the positive difference between their home's market value and the balance on their mortgage), they can borrow at low rates, using that equity as collateral.
And they can use that money for anything, including paying down their card and other balances in a process called debt consolidation.
Historically, cash-out refinances were the go-to way to tap home equity. When mortgage rates are falling, homeowners can acquire a significant injection of cash while simultaneously lowering their rate.
However, that doesn't work as well when rates are rising. A refinance involves getting a whole new mortgage at the prevailing rate. And most homeowners who took out their current loan prior to mid-2022 pay mortgage rates that are significantly lower than today's.
So, many homeowners have been turning to home equity loans (HELOANS) or home equity lines of credit (HELOCs). These typically have rates that are a little higher than standard mortgage rates but quite a bit lower than those on almost all other forms of borrowing.
And, best of all, the main mortgage remains untouched, complete with its relatively low rate.
Read Home Equity Loan or HELOC? It Depends on Your Goals
Most Homeowners Have Gold-Plated Lifelines
New research published this week by Intercontinental Exchange (ICE) shows the average mortgage holder with tappable equity has about $212,000 available.
That's because total mortgage-holder equity topped $18 trillion in the second quarter of 2026, a record high. Of that amount, 47.5 million mortgage holders held $11.7 trillion in tappable equity.
Of course, individual homeowners may have considerably more or less than the $212,000 average, and the amount they can actually borrow will depend on lender requirements and their financial circumstances.
And, sadly, some homeowners will have none. "Approximately 813,000 borrowers are underwater — up 44% year over year — concentrated among FHA and VA borrowers, those who purchased between 2022 and 2025,
and in Texas and Florida where price declines from peak have been most pronounced," says ICE.
An underwater loan is one where the borrower currently owes more on their mortgage than their home is worth in the marketplace.
It Pays to Shop Around for a Loan
ICE's new report came up with a startling statistic:
"Borrowers with nearly identical credit profiles are locking meaningfully different interest rates, averaging a 38-basis-point spread [a basis point is 1/100th of 1 percent] among conforming purchase borrowers in 2026. On a $300,000 mortgage, that difference translates to roughly $76 per month and approximately $5,790 in additional costs over the first five years."
What does that mean? Well, it's saying that different lenders are charging very different interest rates to very similar borrowers. So, those who comparison shop between several different lenders stand a good chance of making worthwhile savings.
And that's especially true for those wanting the most popular government-backed loans. "Among FHA and
VA borrowers, that spread widens to 47 and 48 basis points respectively, with the widest variation concentrated among borrowers with lower credit scores, smaller loan balances, higher loan-to-value ratios, and those using government-backed loan programs," says ICE.
Whether borrowing to buy a home, a car or anything else, including a HELOAN or HELOC, it's worth shopping around multiple lenders for the best possible deal.
