Homeowners are increasingly using their savings to finance home renovation projects rather than their home's equity, says a new survey by TD Bank.
More than 90 percent of respondents say they will use their savings, and head of home equity Jon Giles explains to CNBC, "The public is asking 'How can I most cost-effectively renovate my home?' But we've also found that much of the population isn't aware of existing home equity products." In fact, ATTOM Data Solutions finds that 11 percent fewer HELOCs were originated in Q3 2018 year-over-year.
Rising interest rates may be the culprit. HELOCs typically have adjustable interest rates, and they fluctuate along with the federal funds rate. Right now, the average rate on a HELOC is 5.54 percent. "Returns on cash have improved, but borrowing will cost you more than what you earn on savings." says Greg McBride, chief financial analyst, Bankrate.com
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