While economic instability has kept many potential home sellers on the sidelines and unpredictability in mortgage rates continues to play a major role in homeowner decisions, a new TD Bank survey found that 74% of homeowners polled plan to remain in their current home over the next two years, while 58% said their current mortgage is influencing their decision not to sell.
TD Bank’s HELOC Trend Watch is a nationwide survey of more than 2,000 homeowners who have purchased a home within the past 10 years using a mortgage. The survey explores how homeowners are building and leveraging equity to help them achieve their long-term financial objectives.
“Engaging with a mortgage professional allows homeowners to gain a more comprehensive understanding of how to utilize their home equity in pursuit of their financial objectives,” said Jon Giles, head of residential lending strategy and support at TD Bank.
As prices rise and uncertainty looms in the housing market, home equity has emerged as an essential consideration for many households. Of those who have accessed home equity products, 86% say a home equity line of credit (HELOC) is an important part of their financial safety net, and 70% of all homeowners agree that a HELOC can help them manage expenses and boost financial confidence.
Additionally, 82% of homeowners recognize the advantages of using a HELOC, citing benefits such as flexibility for home repairs, renovations, educational expenses or unforeseen emergencies (59%), lower interest rates relative to many other types of credit (42%), and the opportunity to consolidate higher-interest debt into a single loan (36%).
The process of building home equity is regarded as a long-term, multi-generational financial strategy, with 68% of those surveyed viewing their home as a means of creating generational wealth. This sentiment is especially prevalent among Generation Z homeowners (78%) and those intending to undertake renovations within the next two years (77%).
“Although recent interest rate reductions have begun to shift the housing conversation, overall activity remains subdued, as many homeowners are reluctant to move and forego their current favorable mortgage rates,” said TD Bank's Head of U.S. Residential Lending Steve Kaminski. “As a result, we are seeing an increasing number of individuals leveraging their home equity as a means to enhance their financial position.”
Economic uncertainty has also brought about debt concerns, with 84% of homeowners carrying non-mortgage debt, and 65% of these homeowners' maintaining credit balances of $10,000 or more. These financial pressures are prompting many homeowners to explore consolidation strategies as a means of managing their obligations more effectively. Seven in ten homeowners with non-mortgage debt (70%) say they would consider consolidating their debt into a single loan with a lower interest rate, with some viewing their homes as a potential resource for this purpose. Generational usage of HELOCs and home equity loans stands at 30%, led by Generation Z (41%) and Millennials (38%).
As a slow housing market is keeping many from moving, homeowners are increasingly opting to personalize their residence to better suit their lifestyles. HELOCs and home equity loans have become popular financing tools for substantial improvement projects, with 53% reporting utilizing these options for renovations and 41% for major home purchases, such as furniture and maintenance supplies. Notably, younger homeowners are driving this trend in strategic spending, as evidenced by 48% of Millennials using HELOCs or home equity loans for major purchases.
Sixty-six percent are currently renovating or planning to renovate in the next two years. Among this group, 43% want to enhance outdoor spaces, while 40% are focusing on initiatives designed to boost home equity. Two-thirds (67%) of homeowners have at least $100,000 in equity. With this strong foundation, homeowners are well-positioned to consider thoughtful, long-term financial strategies to make the most of their investment.
