The Quick Read: It can work, but the math got harder this month. As of September 28, 2026, the Fed has raised its target rate for the first time since July 2023. Freddie Mac’s 30-year average has now risen four weeks running. Variable equity lines follow the Fed’s benchmark, and fixed products follow the bond market. Both cost more than they did in August.
Key Takeaways
- The Fed raised its target range on September 16, and big banks passed a quarter-point increase straight into prime, the benchmark behind many HELOCs.
- Freddie Mac’s 30-year average passed 7% for the week of September 24, the first time since January 2025.
- ICE’s latest Monitor shows a record pile of homeowner equity. Much of it is tappable, but the figure predates the September rate jump.
- Overseas buyers add currency risk and a second legal system on top of a U.S. debt secured by the home they live in.
- The decision is no longer “can I tap equity?” It is “which kind of equity loan, and what happens if costs keep rising?”
What Changed Since August?
Three things moved, and they moved together.
First, the Fed. On September 16, the Federal Reserve voted 12–0 to raise its target range a quarter point, to 3.75%–4.00%. It was the first hike since July 2023, and it followed five straight holds.
Second, mortgage rates. Freddie Mac’s weekly survey put the 30-year fixed at 7.03% for the week of September 24, up from 6.95% a week earlier. A year earlier it was 6.30%. FRED’s weekly series shows the climb: 6.71% in the week of September 3, 6.76% on September 10, 6.95% on September 17, then 7.03%. That is four straight weekly rises.
Third, bond yields. CNBC reported that the 10-year Treasury yield touched 5.274% on September 28, its highest since June 2007. Fixed-rate home loans take their cue from that yield, not from the Fed’s overnight rate.
The MBA’s weekly survey for the week ending September 18 shows how borrowers reacted. Applications fell 1.5%. The refinance index fell 3% and sat 62% below a year earlier. The MBA’s 30-year contract rate was 7.12%, its highest since May 2024. Adjustable-rate share rose to 9.8%.
Borrowers are already hunting for something cheaper than a fixed rate.
Does the Fed Hike Move Every Kind of Equity Loan?
No. This is where most people misread the news.
A fed funds hike does not move fixed mortgage rates directly. Freddie Mac’s survey window for the week of September 17 closed before the Fed spoke. Bond markets had already moved. Economists disagree on cause. Some say the Fed followed the market, and others say the hike reassured it. I won’t pretend to settle that.
What I can say is how the two main equity routes behave.
A HELOC is a revolving line of credit secured by your home. Many carry a variable rate tied to prime. Big banks raised prime by a quarter point right after the Fed acted. If you hold a balance, your cost follows within a billing cycle or two. If you have not drawn yet, the line is a set of rules you will pay under later. You can find current guidelines on our HELOC programs page, subject to lender guidelines.
A home equity loan or a cash-out refinance carries a fixed rate. It is priced off the bond market. With the 10-year yield at a multi-year high, those products got more expensive too. The difference is that a fixed rate stays put after closing.
Here is a plain hypothetical. If a variable rate moves from 7% to 8%, that is a full point on every dollar you owe, and it can keep moving. A fixed rate that starts a bit higher stops the story where it is.
Cash-out refinancing also replaces your first mortgage. That matters if your current first mortgage was set when rates were lower. Replacing it means giving up that rate on the whole balance. ICE’s earlier data showed many owners had been choosing second liens to keep their existing first-mortgage rate. The reasoning holds up better now than it did in spring.
Some HELOC programs let you convert part of a balance to a fixed rate, subject to lender guidelines. Ask before you open the line, not after.
How Much Equity Can You Actually Tap?
Plenty, on paper. ICE’s August Mortgage Monitor, released on August 10, is the latest edition I have. It says total mortgage-holder equity hit a record $18 trillion in July. Of that, 47.5 million holders had $11.7 trillion tappable, an average of roughly $246,000 each.
Read that carefully. “Record” applies to total equity. Tappable equity is the part a lender will let you borrow against while leaving a cushion. Also, about 813,000 borrowers were underwater, up 44% from a year earlier.
Two cautions follow.
The figure is dated July. It was measured before September’s rate surge. ICE’s own analyst said rising rates may soften further equity gains in the second half. I would not assume the cushion is as large today.
And home prices have stopped being a tailwind. NAR’s report on August existing-home sales, released September 10, shows sales at a 3.98 million annual rate, down 2.0% from July. Inventory reached 1.62 million homes, a 4.9-month supply that NAR called the highest in over ten years. The median price was $429,100, up 1.6% from a year earlier. That was the 38th straight monthly year-over-year gain, but it was also below July’s median.
Prices are still rising, though only barely. Equity that grows slowly is equity you should not count on growing.
Census and HUD data for August new-home sales, released September 24, point the same way. Sales ran modestly below their level a year earlier, a small decline from August 2025. The monthly gain that month falls inside the margin of error, so it is not statistically distinguishable from no change.
For anyone borrowing against a house, a flat market is a reason to borrow less, not more.
Why Do People Use Home Equity to Buy Abroad?
Because it is often the simplest route. Many foreign lenders limit or decline loans to non-residents. Others price them in ways that make a U.S. line of credit look cheap. A U.S. equity loan lets you pay in cash, which can help in a negotiation, and you keep the debt in dollars under rules you already understand.
That is the logic. I think it is sound as far as it goes.
I could not point you to a federal dataset on how many owners do this, so treat the rest of this section as my reading of the mechanics, not a trend report. The mechanics are what matter.
The weak point is that the debt sits on your U.S. home. If the overseas property loses value, or you cannot sell it, your house is still pledged. If the debt costs more every month, you pay that out of your U.S. income. And if the foreign income you were counting on arrives in another currency, the exchange rate becomes part of your loan.
Not ideal. Not fatal either. It just needs planning.
My Take
My read: September did not make this strategy a bad idea. It made a loose version of it a bad idea.
Before the hike, a buyer could treat equity as nearly free money and sort out the details later. That habit is the thing to drop. When a variable rate is climbing and bond yields are at their highest since 2007, the cost of carrying the debt is no longer a footnote. It is the deal.
Here is how I think about it. A foreign property that pays for itself in local rent and local currency can absorb a higher borrowing cost. One that only works if rates stay put cannot. If you would need the property to appreciate to justify the debt, you are speculating with your home.
Is a HELOC or a fixed loan the better tool? Honestly, it is a toss-up. A HELOC suits a purchase where you can repay the balance on a known schedule. You pay interest only on what you draw, and you can pay it down. A fixed-rate loan suits a buyer who would rather know the cost than chase the lowest number. With prime rising and the Fed’s path unclear, I lean toward fixed for anyone who plans to carry the balance for years. That is an opinion, not a rule.
I also think many buyers are waiting for early 2026 to come back. It is not coming back this year. Freddie Mac’s survey was 6.38% in late March and is now above 7%. Price your deal at today’s cost of money.
If you are weighing the broader question of using a home as a funding source, I wrote about how to use equity in your home for real estate investment. The principles apply to a purchase abroad too, with a few more moving parts.
What I’d Do Before Wiring Money Abroad
Here is the order I would work in. None of it is advice on a specific property or country.
1. Decide what you are protecting. If you could not stand to lose the U.S. home, set a ceiling on how much you will borrow against it. Do that before you look at a single listing.
2. Compare the two products on the same day. Rate quotes gathered on different days are not comparable. In a month when yields moved this much, even a week’s gap can distort the comparison. Gather them together.
3. Understand floating versus fixed. Floating means your cost moves with the market. Locking means you set the cost at a point in time, subject to the program’s terms. If you like a fixed number and you can afford it, lock it. Waiting for a better print has not worked in September.
4. Stress-test the debt. Ask what you would owe if prime rose again. The Fed’s next decision is not mine to forecast, but “no more hikes” is a bet, not a plan. A quarter point on a large balance adds up over a year.
5. Run the property on its own income. Would the foreign property cover its own costs in its own currency? If not, you are funding it from home income, and the real cost is the U.S. debt plus the exchange rate.
6. Get local advice on ownership and taxes. Ownership rules, closing costs and tax treatment differ by country. A local attorney and a tax professional who handles cross-border cases are worth the time. I won’t try to summarize those rules here.
7. Keep a reserve. Leave room between what you borrow and what you can tap. ICE’s equity data is already out of date by one rate shock.
If your goal is rental income, it is worth reading how equity-funded rental purchases actually pencil out. The same discipline applies whether the property is down the street or across an ocean.
Where to Start
If you’re weighing a purchase or a refinance this fall, Lendmire can walk you through how the current programs fit your file. We arrange the options through the lenders we work with, and they review eligibility. We’ll compare equity routes side by side, so you see the tradeoffs before you commit.
For the end-to-end picture of how these loans work — qualification, structures, and the full process — see Lendmire’s complete DSCR loans guide.
Frequently Asked Questions
Is a HELOC or a home equity loan better for an overseas purchase right now?
It depends on how long you will carry the balance. A HELOC follows prime, and big banks raised prime after the Fed’s September 16 hike. A fixed home equity loan follows the bond market and holds steady once set. If you plan to repay quickly from a sale or other funds, the HELOC’s flexibility helps. If you will carry it for years, I lean toward the fixed option. Terms vary by lender and program.
Did the Fed’s hike cause the jump in mortgage rates?
Only partly, and the timing matters. Freddie Mac’s weekly survey for the week of September 17 reflected rates before the Fed’s announcement. Bond yields had been climbing already. The 10-year Treasury yield, which fixed mortgage rates follow, hit its highest level since June 2007 on September 28. The Fed’s decision is one factor among several.
Is the record equity figure all money I can borrow?
No. ICE’s August Monitor reports $18 trillion in total equity but $11.7 trillion tappable. Tappable means what a lender will allow you to borrow while leaving a cushion. The data is also dated July, so it does not reflect September’s rate move. Your own number depends on your home’s value, your balance and the lender’s guidelines.
What risks does an overseas purchase add to an equity loan?
Three stand out. Your U.S. home secures the debt, so a default puts it at risk. Currency swings can raise your real cost if the property earns in another currency. And foreign ownership and tax rules vary by country, so local advice matters. None of these is a reason to skip the idea. Each is a reason to size the debt carefully.
Should I wait for rates to come down before borrowing?
I can’t tell you where rates go next, and neither can anyone else with certainty. Rates were rising for weeks through late September. If the deal only works at a lower cost of money, that tells you something about the deal. If it works at today’s cost, you can proceed with a plan and revisit later if conditions change.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage broker with two platforms: DSCR investor lending across 41 markets, including Washington, D.C., and consumer mortgage programs in 16 states, all arranged through wholesale lending partners. This column is written by Lendmire’s founder and reflects the market as of its publication date; program terms and availability are set by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Federal Reserve Bank of Atlanta — FOMC statement, September 16, 2026
2. CNBC — market update, September 28, 2026
3. MBA Weekly Applications Survey, released September 23, 2026
4. ICE Mortgage Monitor release, August 10, 2026 (via Mondo Visione)
5. NAR — August existing-home sales, September 10, 2026
6. Census/HUD — New Residential Sales, September 24, 2026
This article is part of Lendmire’s Mortgage News series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: Improve Your Credit Score After The Fed’s First Hike Since 2023 · Home Refresh Budgets In Fall 2026: Tappable Equity Meets A Fed Hike · Your Mortgage Pre-approval Budget After The September Fed Hike
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.