In America, home is no longer just a means of living or building wealth. Amidst the increasing credit card loans, it is becoming a kind of ‘ATM machine’. People are paying credit card bills by withdrawing the increased value of the house i.e. home equity. Some are doing mortgage refinance while others are taking a new loan by mortgaging the house. This means that the increasing price of property is now becoming a support to handle the increasing expenses. Linda Borowski, a 63-year-old retired school teacher from Ohio, is an example of this. While traveling for treatment, he incurred a credit card debt of 26 thousand dollars i.e. 25 lakh rupees. Monthly installment spoiled the budget. He took a loan of Rs 43 lakh against the equity of the house. It paid off credit card debt, got new windows installed in the house, and saved some money for a trip to meet the granddaughter. In fact, home equity deposited in the homes of Americans has reached a record 35 lakh crore dollars i.e. about Rs 3,340 lakh crore. Home buying and selling has slowed due to high prices and expensive mortgage rates. In such a situation, people who had taken a home loan at the rate of around 3% a few years ago, are withdrawing money from the same property instead of taking an expensive new loan by selling their house. The biggest reason for withdrawing home equity is the difference in interest rates. The average rate for a 30-year fixed home loan is 6.69%, while interest on credit cards often exceeds 20%. In such a situation, families are finding it better to convert expensive card loans into cheap home loans. The average American homeowner has home equity of $29 million. But this relief is not without risks. Withdrawal of equity does not eliminate the debt, only changes its form. If the economy weakens or income decreases, the installment of the refinanced mortgage may also become heavy. In such a situation, there may be a need to sell the house to repay the loan. This means that today the house is a support, but tomorrow it can also become the biggest burden of debt. 4.5 lakh crore withdrawn from home equity in America during the first quarter In the first quarter of 2026, American homeowners withdrew about Rs 4.5 lakh crore from home equity. Of this, $25 billion was received from loans taken by mortgaging other properties and $22 billion was received from cash withdrawal by refinancing existing mortgages. Cash-out refinancing grew 18% year over year. During the same period, credit card debt increased by 6% to Rs 119.28 lakh crore. According to the Federal Reserve Bank of New York, the total debt of American households in the first quarter reached Rs 1,794 lakh crore, which is 3% more than a year ago. Credit card debt has increased even faster. The average debt per cardholder has increased by 22.7% from 2018 to last year.
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