Should you borrow home equity before 2026? Experts weigh in – CBS News

Report on Home Equity Utilization for Sustainable Development Goals (SDGs)

Executive Summary

As of year-end 2025, homeowners possess a significant financial asset in the form of home equity, collectively valued at $17.3 trillion. Concurrent with this peak valuation, borrowing rates are declining. This report analyzes the opportunity for homeowners to leverage this equity not merely for personal financial gain, but as a strategic tool to advance the United Nations Sustainable Development Goals (SDGs). The central decision examined is whether to utilize these funds before 2026 or await potentially more favorable economic conditions.

Current Market Conditions and Opportunities for SDG Alignment

Economic Overview

• Total Available Equity: Mortgage holders currently have access to an aggregate of $17.3 trillion in home equity.
• Interest Rate Environment: Home equity borrowing rates are trending downwards, with averages now below 8%.
• Financing Instruments: Key options for equity extraction include home equity loans, home equity lines of credit (HELOCs), and cash-out refinances.

Strategic Dilemma: Timing of Equity Utilization for Sustainable Investment

Homeowners face a critical decision point regarding the timing of leveraging their equity for projects aligned with the SDGs. This decision involves balancing current opportunities against potential future benefits.

• Immediate Action (Pre-2026): Capitalize on record-high home valuations to secure maximum funding for sustainability projects.
• Delayed Action (Post-2025): Postpone borrowing in anticipation of further interest rate cuts by the Federal Reserve, which could lower the cost of financing SDG-related initiatives.

Leveraging Home Equity for Direct SDG Impact

The strategic deployment of home equity can directly contribute to several key Sustainable Development Goals.

Advancing Climate Action and Affordable Energy (SDG 7 & SDG 13)

Financing home improvements that reduce carbon emissions and promote clean energy is a primary application of home equity for sustainable development.

• Installation of solar panels to generate clean electricity.
• Upgrading to energy-efficient appliances and insulation to reduce household energy consumption.
• Investment in home electric vehicle (EV) charging infrastructure.

Fostering Sustainable Cities and Communities (SDG 11)

Home equity can be used to improve the resilience and sustainability of housing stock, a core component of SDG 11.

• Funding renovations that use sustainable, recycled, or locally sourced materials.
• Financing the construction of accessory dwelling units (ADUs) to increase housing density and affordability.
• Implementing climate-resilient upgrades to protect property from environmental hazards.

Promoting Economic Stability and Growth (SDG 1 & SDG 8)

Judicious use of home equity can enhance household financial resilience and support local economic growth, aligning with goals to reduce poverty and promote decent work.

• Consolidating high-interest debt to improve a household’s financial stability and prevent poverty.
• Providing seed capital for sustainable small businesses or entrepreneurial ventures.
• Investing in education or skills training to enhance employment opportunities.

Risk Analysis and Strategic Recommendations

Considerations for Immediate Action (Pre-2026)

1. Secure Funding for High-Impact Projects: Current high property valuations provide an opportunity to secure substantial loans for large-scale green retrofits that might be unaffordable if equity diminishes.
2. Utilize Variable-Rate Instruments: A HELOC with a variable rate allows homeowners to access funds now while still benefiting from anticipated rate decreases in 2026 and beyond.
3. Address Urgent Financial Needs: Using equity for debt consolidation can immediately improve a household’s financial health, contributing to SDG 1 (No Poverty).

Rationale for Postponement (Post-2025)

1. Lower Financing Costs: Waiting could result in lower fixed interest rates, reducing the overall cost of financing long-term sustainability projects and increasing their financial viability.
2. Market Observation: A delay allows for further observation of economic trends, providing greater certainty before committing to a significant financial obligation for SDG-aligned investments.

The Critical Role of Property Valuation

The decision to act now or wait is significantly influenced by potential fluctuations in local property values. A decline in home values could reduce the amount of equity available for borrowing, thereby limiting the scope of potential sustainability projects. Conversely, borrowing immediately before a market downturn could place the homeowner in a negative equity position, jeopardizing financial stability.

Conclusion: Aligning Financial Decisions with Global Goals

The decision to tap into home equity is a significant one that requires careful consideration of personal financial circumstances, market forecasts, and risk tolerance. This report posits that this decision can be elevated from a purely financial calculation to a strategic action that supports global sustainability. By consciously directing home equity towards projects that advance clean energy, create resilient communities, and foster economic stability, homeowners can play a direct role in achieving the Sustainable Development Goals. Consultation with financial advisors is recommended to ensure that any such action aligns with both individual financial goals and broader sustainable development objectives.

Analysis of the Article in Relation to Sustainable Development Goals

1. SDGs Addressed or Connected

The article, while primarily focused on financial advice for homeowners, touches upon themes that connect to several Sustainable Development Goals (SDGs). The connections are indirect, as the article’s main purpose is not sustainable development, but the underlying economic and social issues are relevant.

• SDG 1: No Poverty: The article discusses leveraging a major asset—a home—to access financial resources. This relates to the broader goal of poverty reduction by highlighting the importance of asset ownership and access to financial services as a means of achieving financial stability and managing economic life.
• SDG 8: Decent Work and Economic Growth: The content is deeply embedded in the functioning of the economy, particularly the financial and real estate sectors. It discusses financial products, interest rates set by central banks (the Fed), and the role of lending institutions, all of which are critical components of a stable and growing economy.
• SDG 11: Sustainable Cities and Communities: The article’s core topic is home equity, which is directly tied to home values. The discussion of “record amounts of equity” implicitly points to the high cost of housing, which is a central challenge for creating sustainable and inclusive communities where affordable housing is accessible to all.

2. Specific Targets Identified

Based on the SDGs identified, the following specific targets can be linked to the article’s content:

1. Target 1.4: “By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property… and financial services…”
   • The article focuses on homeowners, a segment of the population that has achieved “ownership and control over land and other forms of property.” The entire discussion about borrowing against home equity is an example of these individuals exercising their rights to economic resources and accessing financial services based on their assets.
2. Target 8.10: “Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all.”
   • The article explicitly mentions various financial institutions (Chase Home Lending, Fairway Independent Mortgage, APG Federal Credit Union) and the products they offer (HELOCs, home equity loans). This showcases the role these institutions play in providing access to financial services, which is the core of this target.
3. Target 11.1: “By 2030, ensure access for all to adequate, safe and affordable housing and basic services…”
   • The article’s premise that homeowners are “sitting on record amounts of equity” is a direct result of significant increases in home values. While this is beneficial for existing owners, it is also a key driver of the housing affordability crisis, which this target aims to address. The high equity mentioned is the flip side of the high barrier to entry for prospective homebuyers.

3. Indicators Mentioned or Implied

The article contains several pieces of data and qualitative descriptions that can serve as or imply indicators for measuring progress toward the identified targets.

1. For Target 1.4:
   • Value of assets controlled: The article states that homeowners collectively hold “$17.3 trillion in equity.” This figure serves as a powerful indicator of the value of the economic resources controlled by property owners.
   • Access to financial services: The discussion of various loan types (home equity loan, HELOC, cash-out refinance) implies the existence and accessibility of these financial products for property owners.
2. For Target 8.10:
   • Cost of financial services: The article mentions that home equity borrowing rates are “averaging under 8%.” This interest rate is a direct indicator of the cost associated with accessing financial services.
   • Market activity: The observation that there is an “increased amount of inquiries into taking equity out” indicates consumer engagement with financial institutions and their products.
3. For Target 11.1:
   • Housing market values: The article’s references to “record amounts of equity,” “home appreciation,” and concerns about “home values” falling are all direct proxies for housing price levels. Housing prices are a critical component of indicators that measure housing affordability, such as the house price-to-income ratio.

4. Summary Table of Findings

Source: cbsnews.com