Mortgage rates projected to drop, but not enough to justify refinancing. How homeowners can tap equity for added cash

Core Insights - The average 30-year fixed refinancing rate is currently at 6.54%, while the 15-year term rate is at 5.65% [1] - Fannie Mae projects that the average 30-year fixed mortgage rates will decrease to 6.2% in Q1 2026 and further to 5.9% by the end of the year [2] Mortgage Rates and Trends - Interest rates remain higher than those in 2020 and 2021, with the average 30-year fixed mortgage rate exceeding 6% since 2022 [3] - More than half of U.S. mortgage holders have rates of 4% or lower, and 80% have rates under 6%, making current refinancing rates unattractive for many homeowners [4] Home Prices - The average home value increased from $246,326 at the beginning of 2020 to $359,241 by November 2025 [3] Home Equity Options - Homeowners seeking to access their home equity have alternatives to cash-out refinancing, which may involve higher interest rates [5] - A home equity loan (HEL) allows homeowners to borrow against their home equity, typically at lower interest rates compared to unsecured loans [6] - HELs generally allow borrowing up to 80% of the home's equity, calculated as the home's value minus the remaining mortgage balance [7]