By Boutique Realty
August 15, 2025
Los Angeles homeowners are increasingly turning to cash-out refinancing to unlock the value of their properties — even as mortgage rates remain well above the pandemic-era lows.
According to new data from ICE Mortgage Technology, cash-out refis surged to their highest level in nearly three years during the April–June quarter. Nationwide, these loans accounted for roughly 60% of all mortgage refinances.
A cash-out refinance allows a homeowner to replace their current mortgage with a larger one, pocketing the difference in cash. The money often goes toward consolidating high-interest debt, funding home improvements, or covering major expenses.
Big Equity Gains — and Bigger Loan Balances
In the second quarter, the average U.S. homeowner who completed a cash-out refi pulled about $94,000 from their home equity. That came with a monthly mortgage payment increase of roughly $590 and an average rate hike of 1.45 percentage points compared to their prior loan.
To qualify, most lenders require:
- At least 20% home equity
- A credit score of 620 or higher (average was 719 this quarter)
- At least six months of ownership
The surge in cash-out activity reflects years of home value growth. The median U.S. resale home price hit $435,500 in June — a 48% jump from 2019. In Los Angeles County, where median home prices regularly exceed $900,000, many owners have seen equity soar into the six or even seven figures.
The Risk Factor
While tapping equity can offer financial breathing room, it comes with long-term risks. Borrowers are taking on larger loans — often with higher interest rates and extended repayment terms. If home values drop or financial hardship strikes, foreclosure risks increase.
Some experts suggest that a home equity line of credit (HELOC) may be a safer alternative. Unlike a refinance, a HELOC typically carries lower interest rates and doesn’t replace the existing mortgage.
California’s Cooling Equity Growth
Even with high home prices, the pace of equity growth in parts of California is slowing. ICE reports that tappable equity fell by at least 5% in nearly a quarter of U.S. markets this year. In the West and Sunbelt regions — including parts of Los Angeles County — price growth has cooled compared to the frenzy of 2021–2022.
Still, total U.S. homeowner equity hit a record $17.8 trillion in Q2, with $11.6 trillion potentially available for borrowing.
For LA homeowners considering a cash-out refinance, the decision may come down to timing: mortgage rates have recently eased to 10-month lows, but the market remains in a slowdown — meaning the next move should be weighed carefully.