According to a recent poll conducted by TD Bank, America’s Most Convenient Bank, two-thirds (66%) of homeowners still consider their homes to be a source of wealth for future generations, indicating that homeowners continue to perceive their houses as strong financial assets in the present market climate.
More than 1,800 homeowners who bought a home during the last ten years with a mortgage loan and are currently homeowners participated in TD Bank’s HELOC Trend Watch nationwide poll. Trends in how homeowners are increasing their equity are examined in the poll.
“Homeownership is not just about having a place to live—it’s a critical component of financial security and building generational wealth,” said Steve Kaminski, Head of U.S. Residential Lending at TD Bank. “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.”
Homeowners Stay Put Amid Housing Shortage
According to three out of five respondents (60%) who bought their most recent house, they decided not to sell anytime soon because of the low interest rates they were able to get on their mortgage. Rather, the increasing equity in their property is helping them accumulate wealth.
The continuous housing shortage has also had an impact on this choice, since it has prompted many current homeowners to remain in their homes and take use of their equity. In fact, from 9% in 2023 to 18% this year, the proportion of homeowners who do not want to sell anytime soon and are instead waiting for the housing inventory to rise has doubled from the previous year. Instead of dealing with the difficulties of purchasing in a competitive market, many homeowners are choosing to invest in their existing homes. Given that 74% of Gen Zers and 71% of Millennials see their homes as sources of generational wealth and use their equity to ensure their financial futures, this strategy is highly compatible with the objectives of younger homeowners.
Homeowners are Seeking Additional Debt Consolidation Options
Currently, 84% of respondents have debts other than their mortgage, with 62% of those with $10,000 or more in debt, a minor increase from 61% in 2023. Nearly three-quarters of respondents (71%) who now owe anything other than their mortgage stated that they would be interested in consolidating their debt under a single loan at a reduced interest rate, indicating that rising debt levels are placing more strain on household budgets.
39% of respondents who stated they are not likely to apply for a home equity line of credit (HELOC) or home equity loan (HE Loan) in the near future stated they still view the current borrowing environment as challenging, which is consistent with data from 2023, even though the Federal Reserve is anticipated to continue rate cuts into 2025. However, 37% of homeowners stated that they are more inclined to apply for a HELOC or HE Loan as a cost-effective debt reduction strategy as a result of the recent interest rate reductions.
Younger Homeowners Lead the Charge in Using HELOCs
When it comes to using the equity in their homes, younger generations are leading the way. Outpacing Gen X (53%) and Baby Boomers (17%), over three-quarters of Gen Z respondents (73%) and two-thirds of Millennials (66%) who have had a HELOC or HE Loan in the past or have never had one but are aware of the products are likely to apply for one in the next 18 months. In addition to managing debt, many younger homeowners are using home equity instruments to finance improvements and enhance their long-term financial plans.
Homeowners of all generations are utilizing HE Loans or HELOCs to take advantage of their increasing equity as home values continue to climb. Forty-three percent of people who are remodeling or intend to renovate their homes are doing so in order to raise their home’s equity. Of those surveyed, over half (54%) had utilized a HELOC or HE Loan for renovations. Popular projects for the present or future include eco-friendly improvements (27%), outdoor upgrades (37%), and cosmetic alterations 40%.
“By leveraging equity, homeowners are making essential upgrades and investing in the longevity and value of their property,” said Jon Giles, Head of Residential Lending Strategy & 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. 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.”
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