U.S. homeowners tapped nearly $25 billion in home equity through second-lien mortgages during the first quarter of 2025 — the largest volume for this period in 17 years, according to the ICE Mortgage Technology‘s newest Mortgage Monitor report. That marks a 22% increase compared to the same quarter last year.

The first quarter is typically the slowest for home equity lending, but lower interest rates in early 2025 helped to boost activity — particularly for home equity lines of credit (HELOCs) — and set a strong tone for the rest of the year.

“Equity levels remain historically high, and now we’re seeing the cost of borrowing against the equity drop meaningfully,” Andy Walden, head of mortgage and housing market research at ICE, said in a statement. 

HELOC rates have fallen by 2.5 percentage points in recent quarters and dropped below 7.5% in March, according to ICE. On a $50,000 line of credit, the monthly interest-only payments have dropped by $100 since early 2024 to reach $311 at the start of Q2 2025.

If the Federal Reserve moves forward with three rate cuts and spreads remain steady, rates could dip into the mid-6% range by early 2026 — roughly on par with projected 30-year mortgage rates, ICE reported.

In total, U.S. mortgage holders carried a record $17.6 trillion in home equity entering the second quarter, up 4% from a year earlier. Of that, $11.5 trillion is considered “tappable,” meaning it can be borrowed against while preserving at least 20% equity in the home.

About 48 million mortgage holders have some level of equity, with an average of $212,000 in tappable equity available per borrower. According to a separate ICE survey, roughly one-quarter of homeowners are considering taking out a home equity loan or HELOC in the next year.

“It’s periods like these — where both demand and affordability trends converge — that represent a critical opportunity for housing finance professionals to earn homeowners’ repeat business,” said Tim Bowler, president of ICE Mortgage Technology.

Townsville home prices have continued to surge, with the latest property data revealing the unit market outpaced the house market in the past 12 months.

The June PropTrack Home Price Index showed the median home price in Townsville shot up 20.19 per cent in the year to May to sit at $540,500.

Home prices were also up 2.19 per cent in the May quarter.

Townsville unit prices rose 22.42 per cent in the past year to sit at a median of $422,000, while house prices were up 19.95 per cent to a median of $607,000.

In the May quarter, the average unit price increased 0.9 per cent and the average house price was up 2.33 per cent.

Jools Munro, owner of Explore Property Munro & Co, said while the Townsville property market remained strong, the unit market in particular was running hot.

“Unit days on market are now shorter than houses,” she said.

“I haven’t seen that in my experience.

“Around January 2024, units were sitting at about 120 days on market, now they’re under 40 days.

“That’s a direct reflection of affordability in the Townsville market.”

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Ms Munro said she was seeing more first homebuyers looking at units and townhouses after being priced out of the house market.

“It’s so hard to buy any house under $500,000 that’s remotely attractive,” she said.

“We absolutely still see first homebuyers and buyers under 40 turning up to open homes for houses priced between $650,000 and $750,000, but the ones who don’t have those dollars, with budgets still sitting in the $400,000s, they have to look in the unit market.”

Ms Munro said while the Townsville property market wasn’t going to see price drops anytime soon, competition was starting to wane.

“The number of enquiries from interstate investors have dwindled, which is lovely for locals,” she said.

“In March, we launched a property in Mt Louisa that attracted 26 written offers.

“It was listed for offers over $575,000 and sold for $653,000.

“We haven’t had that flurry on a property since March.

“Last month, about 75 per cent of our sales were to owner occupiers.”

Ms Munro said in more good news for buyers, some suburbs looked to be getting close to their price ceilings.

“Cranbrook, for example, had the big rush, the 34 per cent increase in house prices, but I can’t see too many recent sale moving into the $600,000s,” she said.

“Now what I’m seeing is sales in the $550,000 to $570,000 price brackets.

“Water always finds it balance and the market does too.”

The PropTrack report showed regional Queensland recorded a 0.25 per cent rise in home prices in May, to a median of $733,000, bringing them 8.66 per cent above May 2024 levels.

The median house price in regional Queensland hit $769,000 in May, up 0.36 per cent month-on-month and 8.96 per cent year-on-year.

The median unit price dropped slightly last month, down 0.14 per cent, but was still up 7.58 per cent year-on-year to sit at $674,000.

REA Group senior economist, Eleanor Creagh said in Brisbane home prices peaked in May, rising 0.24 per cent to reach $889,000.

“Brisbane’s median house price has hit a new high as it edges close to $1m, sitting at $998,000 in May,” she said.

“Annually, home prices in Brisbane were up 8.38 per cent as both houses (+7.8%) and units (+11.42%) recorded growth over the year.

“Brisbane remains one of the top performing capital city markets over the past year, alongside Adelaide and Perth.”

The Home Price Index showed national home prices increased 0.39 per cent in May, marking the fifth consecutive month of growth and a new record high for Australian home values.

“With interest rates falling, price momentum has increased and broadened, with all capitals seeing prices lift in May,” Ms Creagh said.

“The growth seen in all capital cities is underpinned by improved buyer sentiment and renewed confidence following interest rate cuts.

“With further price increases and rate cuts expected, prospective buyers are moving off the sidelines and accelerating their purchasing decisions.”

Ms Creagh said looking ahead, stretched affordability would remain a constraint, but a chronic lack of new housing supply, population growth and targeted buyer incentives were expected to keep upward pressure on prices.

“In combination with interest rates continuing to move lower, these factors are likely to drive further price growth throughout the remainder of 2025,” she said.

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May’s interest rate cut – the second for 2025 – is great news for buyers and owners alike. Not only does it reduce interest costs, the rate cut also raises the borrowing capacity of aspiring buyers.

But that’s not all.

The second rate cut appears to have reignited the ‘mortgage wars’, with lenders becoming more competitive to secure new business amid widespread expectations of more rate cuts to come.

We saw evidence of this when many lenders cut their fixed rates weeks before the Reserve Bank’s meeting this month.

Sally Tindall from Canstar told the media that fixed rate home loans had now fallen below 5 per cent. She also said that while it was normal to see fixed rates fall in anticipation of an RBA cash rate cut, some lenders were also cutting their variable rates for new customers at the same time.

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This indicates that competition is heating up, which is greatly beneficial for both new and existing borrowers. Home owners who already have a loan should stay in touch with their broker. A few more rate cuts might make refinancing to another lender offering a better deal worth your while. The latest prediction from Macquarie is three more 0.25 per cent rate cuts in July, August, and November.

There is no guarantee this will happen, but it’s reasonable to be optimistic given inflation is now back in the target 2 per cent to 3 per cent band. That was the Reserve Bank’s main objective when it raised interest rates 13 times in just 18 months between 2022 and 2023. After the RBA meeting this month, Governor Michele Bullock said the board expected underlying inflation (that’s the measure the RBA pays the most attention to) to hover about the midpoint of the target band over the next year or so.

As for the impact on the property market, this second rate cut for 2025 is likely to boost activity a bit because it will give people extra confidence that we are now on a downward trend with rates. But I don’t think we’ll see a meaningful increase in market activity until we’ve had three or four rate cuts. If you have a home loan with NAB, CBA or ANZ, your rate cut went into effect last Friday.

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According to CBA, a 0.25 per cent rate cut is worth about $80 per month in savings for borrowers making principal and interest repayments on an average loan of $500,000. And since this is the second 0.25 per cent rate cut for 2025, the combined saving is about twice as much. But there’s a catch. (If there are five rate cuts this year, you could save up to $144,000)

Some banks require you to opt-in if you want to lower your overall monthly repayment after an interest rate cut. If you don’t, the bank may keep your repayment amount the same, but increase the portion going to the principal and decrease the portion going to interest.

Paying more principal, in theory, is a positive thing.

But if you need the extra cash flow that rate cuts provide to help you cope with today’s high cost of living, you might need to make a phone call. According to CBA, only 14 per cent of eligible borrowers called the bank to request that their home loan repayment be lowered after the first rate cut in February.

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This indicates that borrowers were either keen to accumulate extra redraw funds for a rainy day, or they didn’t understand that their overall mortgage repayment would not be adjusted automatically. So, check your paperwork or call your bank to ensure your home loan repayment is adjusted in whatever way suits your individual circumstances.

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With Melbourne buyers locked out of million-dollar markets, a surge of first-homebuyers and savvy investors are seizing their chance in Victoria’s value pockets.

New analysis from property forecasters Hotspotting has named Frankston, Bendigo and Wodonga among the top 10 best places in the country to buy in 2025, with strong capital growth tipped over the short to medium term.

Hotspotting director Terry Ryder said Victoria was now leading the nation for future buying opportunities, after a sluggish 2024 that saw Greater Melbourne underperform much of the country.

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“Melbourne is looking more promising than it has in years, with transaction levels in the December quarter at their highest since the Covid boom,” Mr Ryder said.

“Units made up around a third of all sales in that quarter, and both the near-city market of Yarra and the lifestyle-focused Frankston area are experiencing rising transaction levels.”

“These are not one-hit wonders. They’ve got the foundations to grow further, and buyers are recognising that.”

Melbourne Property Advocates founder Simon Murphy said confidence had returned in 2025, and buyers were getting strategic.

“Frankston is evolving fast, especially with rezoning near the bay,” Mr Murphy said.

“Some even joke it’s becoming the colder version of Surfers Paradise, give it 10 years and we’ll see if they’re right.”

Mr Murphy said three-bedroom homes on larger blocks were disappearing quickly under $700,000, and investors were back in full force chasing yield and land.

“There’s no such thing as cheap anymore, just smart buying,” he said.

“In this market, if you’re not ready to act, you’ll miss out.”

The Melbourne Property Advocates founder said regional centres like Bendigo and Wodonga were now delivering rental yields of six to seven per cent, with fewer planning headaches and more flexible zoning.

“Bendigo councils are more open to development than many metro ones,” Mr Murphy said.

“And off-market deals are much more common.”

In Wodonga, First National Bonnici & Associates’ Harley Maclachlan said buyer activity had intensified below $700,000, driven by first-home buyers, investors, retirees and downsizers.

“You can still get a quality four-bedroom home around $600,000 here,” Mr Maclachlan said.

“That kind of lifestyle and price point just doesn’t exist in Melbourne anymore.”

With few rental listings and demand rising, Mr Maclachlan said many buyers were expanding their search to neighbouring suburbs.

“The growth is spreading, we’re telling people not to ignore the fringe suburbs of Albury-Wodonga,” he said.

“That’s where the spillover is landing.”

In Frankston, Ray White’s George Devic said homes under $850,000 were being fiercely contested, with first-home buyers, investors and Melbourne upsizers leading the charge.

“That’s where the action is,” Mr Devic said.

“The energy has completely shifted from 2024, buyer activity is up about 25 per cent on last year and that’s huge.”

Mr Devic said more millennials and Generation Z buyers were trading inner-city aspirations for coastal lifestyle, value and space.

“With EastLink, it’s not far from the city, and you’re getting way more home for your money.”

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Isaac Morrow-Jones and Rubin Steyn partnered up on their first home development together – and they managed to pull it off amid spiking build prices across the state.

Both lived in Wavell Heights and saw the suburb as a growing market, and decided it was time to jump into their dream of developing a house.

“For us personally, it was always a conversation about wanting to do developments together,” Mr Morrow-Jones, 26, said.

“I know that sometimes things don’t go the way that they need to go, so I think I was prepared for the whole project from the start … now, we’ve actually brought it to fruition.”

One of the biggest problems for building in 2025 was the cost.

Housing Industry Association data has shown building material prices are at 35.4 per cent above pre-pandemic levels, with building and renovation costs spiking with it.

In 2025, it is 34.4 per cent more expensive for those looking to build a home compared to late 2019, and renovation costs have surged even higher with a 43 per cent jump.

Mr Morrow-Jones previously worked in the construction industry, and said he saw things get harder for everyone in that profession over the past five years.

“After Covid, there were a lot of companies out there that were struggling from the price increase, especially because there were locked in contracts with developers,” he said. “Ultimately, a lot of projects that were priced pre-Covid were now in the red.”

When building his house, Mr Morrow-Jones found builders to have accounted for these new price increases in the contract, which also included an uptick in labour costs.

He added that to help keep those prices down, he and Mr Steyn needed to make sure the materials they’d be using were readily available, avoiding the risk of further expense.

“What we selected at the start of the project, we knew 100 per cent that it was going to be available,” he said. “That’s a massive part of the cost.”

The two business partners are now selling their completed build at 2 Taabinga St, Wavell Heights, with Place Ascot.

Place Ascot Director Drew Davies said rising build costs meant those looking to make a home from scratch might have to think harder about if they should – but added it was a good opportunity for developers.

“It depends if you’ve got a burning desire, and the capacity to do it yourself,” he said.

“There’s a super strong demand for finished product at the moment.”

“When you buy a finished product, the price is the price … you avoid those budget blowouts [with] a build.”

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