Palo Alto, California, Oct 13, 2022 - Though mortgage interest rates haven’t been this high since 2002, 29 percent of homeowners say they are considering or pursuing financing secured by their home, according to new research from Point, the leading home equity platform. More than half of homeowners (61 percent) said they considered a home equity line of credit (HELOC) or mortgage refinance in the last 12 months, but about one-third (35 percent) of those homeowners decided not to pursue the loan due to rising interest rates.
The company released the results of a new survey of over 1,000 U.S. homeowners about their attitudes toward accessing the wealth built up in their homes' equity.
Based on the current interest rate, U.S. homeowners are paying an additional $695 in monthly mortgage payments compared to what they would have paid if they'd gotten the equivalent mortgage a year ago. Over the lifetime of the loan, that adds up to $250,000 in extra mortgage interest payments.
Despite these rising rates, homeowners continue to look for ways to tap their historically high home equity, which totaled $29 trillion in the second quarter of 2022. The homeowners who had been considering loans, but who decided not to pursue a HELOC or refinance due to rising rates, say they will cut back on expenses (39 percent), while 34 percent feel they have no other options.
“With interest rates in the news so much — and with the true cost of a loan increasing significantly in the last six months — it’s telling that so many homeowners are still eager to tap into their home equity or feel as if they have no other good choices,” said Eddie Lim, CEO and co-founder of Point. “Higher consumer debt levels and inflation mean homeowners need more access to cash, but homeowners are often unaware of all available options. And the vast majority of U.S. homeowners are sitting on an asset holding a lot of their wealth – but it’s not liquid.”
If homeowners were able to take out $50,000 from their homes, the top-ranked use cases for the cash would be to:
- Use it for home improvement projects (39 percent)
- Pay off existing debt (31 percent)
- Invest it (10 percent), and
- Use it to start a business (6 percent).
Those with more perceived equity in their homes were more likely to say they would use the funds on home improvement or investing, while those with perceived smaller amounts of equity would focus on paying off debt.
“Rising interest rates will continue to impact homeowners' ability to access the equity in their home,” continued Lim. “Combined with inflation and the lasting impacts of the pandemic on personal finances, many homeowners may feel like they have no options. But homeowners may have more options than they are aware of, such as a Home Equity Investment. We believe HEIs can be a compelling solution for those looking to tap into their equity while avoiding issues with rates and without having to add on a monthly payment.”
For more survey details, the full report can be downloaded here.