More than a quarter-billion kitchen renovations are what the country’s mortgaged homeowners could have undertaken with the $13.2 trillion in accessible equity they held at the end of the second quarter.

But unfortunately, says First American Financial Corp., the largest underwriter of title insurance in the U.S., most of that home equity is not as accessible as it looks.

“The housing market is deeply equity rich and rate locked,” said Genaro Villa, a senior economist at First American, in a new analysis examining how persistent mortgage rate lock-in effects are driving record slow housing turnover and distorting borrower equity trends.

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Typical 30-year mortgage rates ended the second quarter around 6.5%, up from around 6% in early March. But a steady increase in borrowing costs since the Iran war began in late February belies a broader structural shift in the mortgage market following the COVID-19 pandemic.

“Homeowners have a record amount of wealth available to tap, but nearly nine out of every 10 accessible-equity dollars sit behind a mortgage rate below today’s market rate,” Villa added.

Two-thirds of current borrowers had mortgage rates under 5% as of the end of July, according to ICE Mortgage Technology data. More than half of existing borrowers had rates below 4%.

Protecting those ultra-cheap home loans can yield significant financial benefits to borrowers, especially in comparison to loans originated in the higher-rate environment that has lasted since late 2022.

Real estate analytics firm Cotality reported in September that borrowers who purchased homes in 2020 or 2021, when typical 30-year rates averaged 3% or lower, save an average of $915 per month on their mortgage payment compared with those who bought in 2023.

Mortgage rates experienced a nearly identical run-up in 2023 — from about 6% in February to 7.5% in early October — as they have in 2026, according to Freddie Mac data.

“That means much of the country’s record home equity remains on the sidelines, while the same homeowners continue to benefit from the lower monthly payments that helped create it in the first place,” said Thom Malone, principal economist at Cotality, in the report from September.

First American’s latest data shows that roughly 83% of the nation’s locked-in but technically accessible home equity was classified as “extremely locked” during the second quarter, meaning the borrower’s mortgage rate was 1.5 percentage points or more below prevailing market rates.

The mortgage rate gap has caused demand for cash-out refinances to vanish in recent years as higher rates have persisted. Mortgage rates that rose to around 7.5% by the end of the third quarter have only intensified enduring lock-in effects.

“For some homeowners, preserving a low-rate first mortgage and using a [home equity line of credit] or home equity loan may be more attractive,” said Villa, “while others with rates closer to prevailing levels may find a cash-out refinance more appealing.”