A new survey from TD Bank shows that most homeowners think of their properties as precious financial assets and two-thirds (66%) view their home as a source of generational wealth.
This comes from TD Bank’s HELOC Trend Watch, a national survey of more than 1,800 homeowners who purchased a home with a mortgage within the past 10 years. The purpose of the survey is to explore how homeowners are building their equity.
Head of U.S. Residential Lending at TD Bank, Steve Kaminski, emphasized in a press release that the meaning of homeownership goes beyond having a roof over your head, saying, “it's a critical component of financial security and building generational wealth.”
“With interest rates expected to continue to drop over the next year, home prices and equity values will fluctuate alongside the U.S. housing supply. We’re finding that home equity is playing a bigger role in helping homeowners stay financially flexible,” Kaminski said.
Homeowners Stuck Amid Housing Shortage
The survey found that 60% or three-out-of-five respondents who purchased their home reported that the low interest rates they secured on their mortgage have influenced their decision not to sell in the near future. Rather, they are building wealth through their home's growing equity.
How long homeowners plan to stay put depends on the return of housing supply. The percentage of homeowners who are not planning to sell and are waiting for housing inventory to increase doubled from 9% in 2023 to 18% in 2024.
Instead, many homeowners are choosing to invest in their current properties, rather than face tough competition in the current market.
Younger homeowners in particular strongly believe in this strategy, with 74% of Gen Zers and 71% of Millennials viewing their homes as sources of generational wealth, leveraging their equity to secure their financial futures.
Debt Consolidation On The Rise
A significant 84% of respondents are holding debt beyond their mortgage, and 62% of those are carrying $10,000 or more in additional debt — up one percentage point from last year. With debt levels on an upward trajectory, households are buckling under the pressure. Nearly three quarters (71%) of survey respondents said they would be interested in consolidating their debt under one loan at a lower interest rate.
The Federal Reserve is expected to continue interest rate cuts into 2025, though it may not be enough to sway all homeowners. Among respondents who noted they are unlikely to apply for a HELOC or home equity loan in the near future, 39% said they still view the current borrowing environment as challenging. Then again, 37% of homeowners reported that the recent interest rate cuts make them more likely to apply for a HELOC or home equity loan, viewing it as a cost-effective way to reduce debt.
Younger Homeowners Lead the Charge For HELOCs
TD Bank finds that younger generations are setting the pace when it comes to leveraging their home’s equity. Almost three-quarters of Gen Z respondents (73%) and two-thirds of Millennials (66%) who previously had a HELOC or home equity loan (or never did, but know about the products), are likely to apply for one in the next 18 months, outpacing Gen X (53%) and Baby Boomers (17%). Younger homeowners are embracing home equity products to manage debt, finance renovations, and improve their long-term financial strategies.
Homeowners across every generation are using HELOCs or home equity loans to capitalize on their growing equity. Of those who are currently renovating or planning to renovate their home, 43% are doing so to increase the equity of their home.
Specifically, more than half (54%) of respondents who had a HELOC or home equity loan have used it for renovations, with current or future popular projects including cosmetic changes (40%), outdoor upgrades (37%) and eco-friendly additions (27%).
Homeowners are making essential upgrades while investing in the longevity and value of their property, according to Jon Giles, head of residential lending strategy and support at TD Bank.
“When used responsibly, home improvements can benefit a borrower by not only adding value to their home but also enhancing their quality of life,” Giles said. “That's why it's important to speak with a mortgage professional to identify the purpose and potential impact of using your equity, ensuring it meets long-term financial goals.”
