Most Homeowners Feel Optimistic about Their Increasing Equity with Many Planning to Tap into It for Renovations

A recent survey from TD Bank, America's Most Convenient Bank found that more than one third (38%) of homeowners who are renovating in the next two years are using or plan to use a home equity line of credit (HELOC) or home equity loan (HE Loan) to finance their renovations. But it appears for some, that investment may be in preparation to later sell their homes.

TD Bank’s HELOC Trend Watch is a national survey of more than 1,800 adult homeowners who purchased a home within the past 10 years using a mortgage loan and currently own their homes. The survey examines trends surrounding home equity usage.

A Healthy Dose of Optimism

As potential homebuyers continue to navigate higher interest rates and lower inventory, current homeowners are optimistic about the equity building in their homes. Eighty-three percent of respondents believe their home equity has increased within the last year, with 57% of those who know their home equity estimating they have $100,000 or more. A recent Black Knight report shared the average homeowner has $199,000 in home equity as of June – up $14,000 from Q1 of 2023.

Considering those positive sentiments and current market conditions, 57% of respondents who previously or never had a HELOC or HE Loan said they are likely to apply for one in the next 18 months, up 9% from 2022.

“Home equity continues to be one of the more affordable ways that current homeowners can access funds to improve the condition of their home and increase its value,” said Jon Giles, Head of Real Estate Secured Lending Strategy & Support at TD Bank. “What's most important is to borrow responsibly – for things like renovations, education costs, large home purchases or debt consolidation – ensuring the money is used to benefit a homeowner's overall financial position."

Renovations Drive HELOC and HE Loan Interest

Renovations continue to be one of the most common uses for HELOCs and HE Loans. In fact, over two-thirds (69%) of homeowners are currently renovating or plan to renovate their home in the next two years. Respondents also revealed the main reasons for renovating are cosmetic (43%), improving the quality of their outdoor space (43%), making the home more ecofriendly (29%), and because the house is lacking key features (28%). The kitchen (54%) and bathroom (54%) still reign supreme as the top two rooms homeowners will renovate, followed by the living room (38%).