Younger generations are more likely to use home equity loans to plan for long-term financial health

A recent survey from TD Bank, America's Most Convenient Bank®, reveals that in the current market environment, homeowners continue to see their properties as powerful financial assets, with two-thirds (66%) viewing their home as a source of generational wealth.

TD Bank’s HELOC Trend Watch is a national survey of more than 1,800 homeowners who purchased a home in the past 10 years using a mortgage loan and currently own their home. The survey explores trends in how homeowners are building their equity.

“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 U.S. 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 U.S. housing supply. We’re finding that home equity is playing a bigger role in helping homeowners stay financially flexible.”

Homeowners Stay Put Amid Housing Shortage

Three out of five respondents who purchased their most recent home (60%) reported that the low interest rates they secured on their mortgage have influenced their decision not to sell in the near future. Instead, they are building wealth through their home's growing equity.

This decision is also influenced by the ongoing housing shortage – which has encouraged many existing homeowners to stay put and tap into their home’s equity. In fact, the percentage of homeowners who are not planning to sell in the near future and are waiting for housing inventory to increase before making a move has doubled year-over-year from 9% in 2023 to 18% for this year. As a result, many homeowners are opting to invest in their current properties, rather than face the challenges of buying in a competitive market. This approach aligns closely with the goals of younger homeowners, as 74% of Gen Zers and 71% of Millennials view their homes as sources of generational wealth, leveraging their equity to secure their financial futures.

Homeowners are Seeking Additional Debt Consolidation Options

Eighty-four percent of respondents are currently holding debt beyond their mortgage, with 62% of those carrying $10,000 or more in additional debt – increasing slightly from 61% in 2023. Rising debt levels are putting increased pressure on household finances, as nearly three-quarters of respondents who currently have any debt other than their mortgage (71%) said they would be interested in consolidating their debt under one loan at a lower interest rate.

Though the Federal Reserve is expected to continue rate cuts into 2025, 39% of respondents who noted they are not likely to apply for a home equity line of credit (HELOC) or home equity loan (HE Loan) in the near future said they still view the current borrowing environment as challenging, remaining steady from previous data in 2023. However, 37% of homeowners reported that the recent interest rate cuts make them more likely to apply for a HELOC or HE Loan, viewing it as a cost-effective way to reduce debt.

Younger Homeowners Lead the Charge in Using HELOCs

Younger generations are setting the pace when it comes to leveraging their home’s equity. Nearly three-quarters of Gen Z respondents (73%) and two-thirds of Millennials (66%) who previously had a HELOC or HE Loan or never did but know about the products are likely to apply for one in the next 18 months, outpacing Gen X (53%) and Baby Boomers (17%). These younger homeowners are embracing home equity products to not only manage debt, but also to finance renovations and improve their long-term financial strategies.

As home values continue to rise, homeowners across all generations are using HELOCs or HE Loans to capitalize on their growing equity. Forty-three percent of those who are currently renovating or planning to renovate their home are doing so to increase the equity of their home. More than half (54%) of respondents who had a HELOC or HE Loan have used it for renovations, with current or future popular projects including cosmetic changes (40%), outdoor upgrades (37%) and eco-friendly additions (27%).

"By leveraging equity, homeowners are making essential upgrades and investing in the longevity and value of their property," said Jon Giles, Head of Residential Lending Strategy & Support at TD Bank. "When used responsibly, home improvements can benefit a borrower by not only adding value to their home but also enhancing their quality of life. That's why it's important to speak with a mortgage professional to identify the purpose and potential impact of using your equity, ensuring it meets long-term financial goals."

Survey Methodology

This report presents the findings of a CARAVAN® survey conducted by Big Village Insights among a sample of 1,808 U.S. homeowners who purchased a home within the past 10 years and acquired a mortgage when they bought their most recent home. The survey was conducted from October 3 to October 13, 2024.

About Big Village Insights

Big Village Insights is a global research and analytics business uncovering not just the ‘what’ but the ‘why’ behind customer behavior, supporting clients' insights needs with agile tools, CX research, branding, product innovation, data & analytics, and more. Big Village Insights is part of Bright Mountain Media. Find out more at https://big-village.com.

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. by assets, providing over 10 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 Instagram at www.instagram.com/TDBank_US/.

TD Bank is a subsidiary of The Toronto-Dominion Bank, a top 10 North American bank. 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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