CHERRY HILL, N.J., July 10, 2019 /PRNewswire/ -- Nearly half of
homeowners (48 percent) plan to renovate their homes in the next
two years, and a third of those homeowners expect to spend more
than $50,000 on their renovations,
according to recent research from TD Bank, America's Most
Convenient Bank®.
TD Bank's Home Equity Trend Watch is a national survey of more
than 1,800 homeowners which examines trends in home equity usage
and home renovations. The findings reveal that while many
homeowners are dipping into their savings (48 percent) and checking
accounts (34 percent) to fund renovations, many are establishing
substantial budgets and seeking financing options. A quarter (25
percent) say they will borrow through a home equity line of credit
(HELOC), and a similar portion will utilize a personal credit card
(24 percent) or a personal loan (18 percent).
"While there are many viable options for funding a renovation, a
home equity line of credit is one of the most affordable ways to
borrow," said Jon Giles, Head of
Home Equity Lending at TD Bank. "During a HELOC's 10-year draw
period, it functions much like a credit card, whereby you can draw
funds when you need them. But while credit cards typically carry
interest rates around 17 percent, a well-positioned borrower
seeking a HELOC can secure rates close to the Federal Reserve's
prime rate, which is currently around 5.5 percent. This also
provides flexibility, as most homeowners won't want to draw on cash
reserves or savings when unexpected expenses arise."
Hammering Out the Financing
As of late 2018, the average U.S. mortgage holder had more than
$113,000 in equity in their home,
which is calculated by subtracting their mortgage balance from the
current, appraised value of their home. Yet much of that equity
remains untapped. Just a third (36 percent) of survey respondents
said they have had a home equity loan or HELOC.
"We've found that many homeowners simply aren't aware of how
they can leverage the equity in their homes," said Giles. "Home
equity financing is ideal for projects that will add value to one's
home, such as a renovation. It's also frequently tapped to
consolidate higher interest rate debt, or to help with education
expenses. At TD, we are working to increase awareness and education
so that more homeowners can take advantage of their home equity
when they need it."
Indeed, the survey uncovered several gaps in understanding home
equity:
- Nearly a quarter (23 percent) of homeowners said they
could not define a HELOC.
- Almost a third (32 percent) of homeowners did not know the
current equity in their home.
- One in six (16 percent) homeowners did not understand the
impact of fixed versus variable rates on monthly payments.
DIY or Buy? A Generational Divide
While a desire to undertake home renovations spanned all
audience segments, key generational differences were observed in
respondents' priorities and strategies for renovating.
More than half (54 percent) of baby boomers – those over age 55
– said appearance/quality of the final product was their top
renovation priority, while 18-34 year-olds were more likely to
prioritize cost first (43 percent). What's more, 27 percent of the
youngest respondents indicated the speed of the renovation was
their first priority, compared to zero boomers.
When it comes to tackling the renovations, 64 percent of
respondents in the 18 to 34 age group said they would do some or
all of the work themselves, indicating they are likely looking to
save on labor costs. Meanwhile, 60 percent of boomers said they
would hire professionals to carry out all of the work.
Across the board, homeowners said they are planning to renovate
their bathroom (26 percent) and their kitchen (25 percent) more
than any other area of their home. Nearly half (48 percent) said
improving the quality of their outdoor space was a top reason to
renovate.
More information about TD Bank's home equity offerings can be
found at
https://www.td.com/us/en/personal-banking/home-equity/.
Survey Methodology
The study was conducted by research
company Maru/Matchbox. Respondents were composed of a nationally
representative sample of 1,801 American homeowners, with a margin
of error of +/- 2.3 percent. The survey was fielded from
April 2nd to
17th, 2019.
About MARU
Maru/Matchbox is a professional
services firm dedicated to improving its clients' business
outcomes. It delivers its services through teams of sector-specific
research consultants that have technology in their DNA,
specializing in the use of Insight Community and Voice of Market
technology. Maru/Matchbox research drives decision-making
across all aspects of customer experience, including innovation,
product, branding, commercialization and communications.
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 more than 9 million customers
with a full range of retail, small business and commercial banking
products and services at more than 1,200 convenient locations
throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas
and Florida. In addition, TD Bank
and its subsidiaries offer customized private banking and wealth
management services through TD Wealth®, and vehicle
financing and dealer commercial services through TD Auto Finance.
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.
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