Rising debt and tight housing supply push homeowners to unlock equity for renovations
Amid low housing inventory and rising debt, more homeowners are turning to their home equity to strengthen their financial standing, according to a recent TD Bank survey.
The survey revealed that many homeowners are holding on to their properties rather than selling, leveraging home equity to consolidate debt, fund renovations, and build generational wealth.
With a tight housing market and historically low mortgage rates locked in, 60% of surveyed homeowners reported they are choosing not to sell their homes in the near future. Instead, they are banking on growing home equity as a financial tool. The trend has doubled year-over-year, with 18% citing low inventory as a key reason to delay selling, compared to 9% last year.
“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 US 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 US housing supply. We’re finding that home equity is playing a bigger role in helping homeowners stay financially flexible.”
Younger generations lead equity use
Younger homeowners are leading this mindset shift, with 74% of Gen Z and 71% of Millennial respondents viewing their homes as key assets for creating wealth across generations.
Nearly three-quarters of Gen Z homeowners (73%) and 66% of Millennials said they are likely to apply for a HELOC or HE Loan within the next 18 months. This enthusiasm outpaces Gen X (53%) and Baby Boomers (17%), indicating younger generations’ growing reliance on home equity as a financial strategy.
Equity is being used for more than just debt management. Renovations are a significant focus, with 43% of respondents saying they aim to increase their home’s equity through improvements. Popular projects include cosmetic upgrades (40%), outdoor improvements (37%), and eco-friendly additions (27%).
Debt consolidation a growing concern
As household debt increases, homeowners are seeking ways to ease financial pressure. The survey found that 84% of respondents carry debt beyond their mortgage, and 62% have $10,000 or more in additional debt. Among those with extra debt, 71% expressed interest in consolidating it under a single, lower-interest loan.
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Recent Federal Reserve rate cuts have made home equity products like HELOCs and HE Loans attractive options. Thirty-seven per cent (37%) of respondents said the cuts make them more likely to apply for such products, though 39% still view the borrowing environment as challenging.
"By leveraging equity, homeowners are making essential upgrades and investing in the longevity and value of their property," Jon Giles, head of residential lending strategy and support at TD Bank, said in the report. "When used responsibly, home improvements can benefit a borrower by not only adding value to their home but also enhancing their quality of life.”
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