New Delhi, Aug. 14 -- Homeowners are cashing in on years of home equity gains, even as mortgage rates remain elevated.

The trend sent cash-out home refinancing activity to a nearly three-year high in the April-June quarter, according to data from home loan data tracker ICE Mortgage Technology.

In a cash-out refinance, a homeowner takes out a loan for more than they owe on their mortgage and then pockets the difference. The funds are often used to consolidate debt, finance home improvement projects and pay for big-ticket purchases.

The average cash-out refinance in the second quarter resulted in the homeowner pulling $94,000 in home equity, increasing their monthly payment by $590. On average, they also raised the interest rate on their...