As Inflation Lingers, Homeowners Are Paying Closer Attention to Their Rising Home Equity but Not Tapping into It

Rhea-AI Summary

According to TD Bank's 2022 Home Equity Trend Watch survey, 47% of homeowners are aware of their home equity, a significant rise from 32% in 2019. The survey reveals that 87% of respondents have seen an increase in their equity since purchasing their homes, yet many are hesitant to access these funds. Despite 70% feeling financially stable, over half (52%) of homeowners are unlikely to apply for home equity loans or HELOCs in the next 18 months. Renovations remain a primary use for these loans, with 43% of respondents planning to utilize them for home improvement projects.

Positive

• 47% of homeowners know their home equity, up from 32% in 2019.
• 87% of respondents reported an increase in home equity since purchase.
• Home renovations are a primary use for HELOCs, with 43% planning to use them.

Negative

• 52% of homeowners unlikely to apply for a HELOC or home equity loan in the next 18 months.
• 33% of respondents uncomfortable using home equity as collateral for debt consolidation.

According to TD Bank's 2022 Home Equity Trend Watch survey, 47% of homeowners know how much equity they have in their home, compared to 32% in 2019.

CHERRY HILL, N.J., Oct. 13, 2022 /PRNewswire/ -- A recent survey from TD Bank, America's Most Convenient Bank® found that 87% of respondents indicated an increase in equity since purchasing their home, but far fewer are planning to tap into this potential source of funds in the next 18 months.

Many Americans have more equity in their homes than ever before, so utilizing it may make financial sense

TD Bank's HELOC Trend Watch is a national survey of over 1,800 U.S. adult homeowners who purchased a home within the past 10 years using a mortgage loan. The survey examines trends surrounding home equity usage.

Unlocking Home Equity

With inflation reaching a 40-year high during the summer, 70% of respondents still consider themselves very or somewhat financially stable. But with continued economic and market volatility, many Americans are exploring ways to cut unnecessary expenses and pay down any high-interest debts. Home equity lines of credit (HELOCs) and home equity loans can be a relatively low interest way to access equity built from owning a home. However, more than half (52%) of homeowners who previously had a HELOC or home equity loan or never did but know what it is consider themselves not at all or not very likely to consider applying for either in the next 18 months. This is despite having an interest in renovations or debt consolidation.

"Many Americans have more equity in their homes than ever before, so utilizing it to their advantage may make financial sense," said Jon Giles, Head of Consumer Direct Lending at TD Bank. "When used responsibly, HELOCs and home equity loans are effective, affordable tools which can assist in paying down higher interest debt, covering education costs or allowing for home renovations, which add value to the property."

Sixty-five percent of participants who have any debt other than their mortgage indicated they would be interested in consolidating some or all their debt under a lower interest rate loan, with 47% viewing this as the most important trait of their debt consolidation tactic. And while HELOCs and home equity loans typically have lower interest rates than many personal loans, a third (33%) of those who have debt other than their mortgage and are interested in consolidating it at a lower interest rate, feel neutral or uncomfortable doing so using their home as a collateral. In fact, 43% of those respondents would prefer to use a personal loan. This could indicate a gap in understanding the benefits of tapping into home equity. 

"Consumers should always consider their unique financial situation and speak with a lender first when exploring options to utilize home equity," said Steve Kaminski, Head of Residential Lending at TD Bank. "Lenders can help borrowers understand what products align with their financial goals, their current equity level and how they plan on using the money. They'll also help make sense of the current market so you can understand what your payments will look like and how they can change based on today's interest rate environment."

While debt consolidation continues to be a priority for many, the kind of debt homeowners carry varies. The survey found that 69% of participants who have any debt other than their mortgage have credit card debt among the highest interest rate category for borrowers. Other forms of debt among these respondents include car loans (43%), personal loans (32%), student loans (27%), and nearly 1 in 5 (19%) have medical debt. 

Home Renovations Reign Supreme

Renovations continue to be one of the most common uses for HELOCs and home equity loans. In fact, 43% of respondents who are planning or currently renovating their home intend to use a HELOC or home equity loan for their renovation projects. And supply chain challenges aren't curbing enthusiasm for consumers. Seventy-eight percent of those who noted speed as their top priority in their renovation still plan to move forward. And almost half (49%) of those who noted overall costs as their top priority still plan to move forward with renovations as labor and supply chain shortages complicate the process further.  Kitchens were the most popular room/area to renovate (55%).

"As homeowners look for flexible lending options to power their renovation projects, home equity loans and HELOCs are great options to consider," said Kaminski. "HELOCs, in particular, lend themselves to flexibility with borrower's ability to draw funds as needed. With supply chain disruptions and rising inflation continuing to impact the total cost of home renovations, flexibility will be key in accessing funds throughout the process."

As renovation costs rise, many are also considering do-it-yourself projects when tackling home fixes. The study found 42% of respondents who are planning or currently executing home renovations will hire professionals to do all the work, while another 36% plan to do some of the work themselves and hire a professional for other tasks.

Survey Methodology

This report presents the findings of a CARAVAN® survey conducted by Big Village among a sample of 1,813 U.S. adults ages 18 and older who currently own their home, last purchased a home within the past 10 years, and acquired a mortgage when they purchased their most recent home. These respondents are referred to as "homeowners" throughout the report.

About Big Village

Big Village, formerly ENGINE, is a global, full-service media and marketing services company that empowers clients to outperform in the present and win in the future with its vast range of marketing solutions including insights, creative, media, data, and technology. Founded in 2005, Big Village has global headquarters in New York and 16 offices across North America, the UK, Europe, and Asia-Pacific. Find out more at big-village.com and follow @wearebigvillage.

About TD Bank, America's Most Convenient Bank^® 

TD Bank, America's Most Convenient Bank, is one of the 10 largest banks in the U.S., providing over 9.8 million customers with a full range of retail, small business and commercial banking products and services at more than 1,100 convenient locations throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida. In addition, TD Auto Finance, a division of TD Bank, N.A., offers vehicle financing and dealer commercial services. TD Bank and its subsidiaries also offer customized private banking and wealth management services through TD Wealth^®. TD Bank is headquartered in Cherry Hill, N.J. To learn more, visit www.td.com/us. Find TD Bank on Facebook at www.facebook.com/TDBank and on Twitter at www.twitter.com/TDBank_US and www.twitter.com/TDNews_US.  

TD Bank, America's Most Convenient Bank, is a member of TD Bank Group and a subsidiary of The Toronto-Dominion Bank of Toronto, Canada, a top 10 financial services company in North America. The Toronto-Dominion Bank trades on the New York and Toronto stock exchanges under the ticker symbol "TD". To learn more, visit www.td.com/us. 

 

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SOURCE TD Bank

FAQ

What did the 2022 Home Equity Trend Watch survey by TD Bank reveal?

The survey found that 47% of homeowners know their home equity, up from 32% in 2019, with 87% seeing an increase in equity since purchase.

How many homeowners are planning to tap into their home equity in the next 18 months?

Over half (52%) of homeowners indicated they are unlikely to apply for a HELOC or home equity loan in the next 18 months.

What are the primary reasons homeowners consider HELOCs according to the TD Bank survey?

The primary uses for HELOCs include home renovations, with 43% of respondents planning to use them for such projects.

What percentage of homeowners feel financially stable despite economic volatility?

About 70% of respondents in the survey consider themselves very or somewhat financially stable.

What concerns do homeowners have about using HELOCs for debt consolidation?

33% of those interested in consolidating debt feel neutral or uncomfortable using home equity as collateral.