Homeowners tapped their home equity lines of credit in the third quarter at the highest rate in more than two decades, according to a new Federal Reserve Bank of New York report on household debt released Tuesday.

Balances on HELOCs jumped by $23 billion during the three months ending Sept. 30, the largest increase since 2005. That brings the outstanding amount owed to $481 billion, the report shows. This also marks the 18th consecutive quarterly increase.

HELOC balances peaked at roughly $714 billion in the first quarter of 2009, according to a 2015 New York Fed report. 

The current rise in balances comes amid a sluggish housing market, due at least partly to the so-called mortgage rate lock-in effect. Just under half of outstanding mortgages — 49.1% — carried rates of 4% or lower in the second quarter, according to a Realtor.com analysis of federal mortgage data, leaving many owners reluctant to give up their low rates to purchase another home at current higher borrowing costs. 

The median price of an existing home was $417,500 in September, according to the National Association of Realtors, a real estate trade group. While up just 1.3% from a year earlier, the amount is nearly 54% higher than in September 2019, according to NAR. The average rate on a typical 30-year fixed-rate mortgage is 7.3% as of Tuesday, according to Mortgage News Daily.

“HELOCs let them borrow against their equity without giving up the low interest rate on their home,” said certified financial planner Douglas Boneparth, president and founder of Bone Fide Wealth in New York City and a member of CNBC’s Financial Advisor Council.

Mortgage holders collectively had $17.5 trillion in home equity as of the third quarter, according to a new report from Intercontinental Exchange, or ICE, a financial markets technology and data company.

Tappable equity that can be accessed — meaning a homeowner’s equity would remain at or above 20% of the home’s value after tapping it — rose 1.2%, or $16,600, from a year ago to an average of $204,000 per borrower, the ICE report shows.

“Homeowners are sitting on substantial housing wealth, with 2.4 million mortgage holders now holding at least $1 million in equity,” Andy Walden, head of mortgage and Housing Market Research at ICE, said in the report. 

While HELOCs may have fewer up-front costs than a home equity loan, they generally have a variable interest rate. This means it will move up and down based on a benchmark like the prime rate, which banks use as a basis to set rates on a variety of loans. And, while the Federal Reserve doesn’t control that rate, it is influenced by changes the Fed makes to the so-called federal funds rate.

“If your…