Amid High Interest Rates and Inflation, American Homeowners Would Rather Renovate Than Buy a New Home
06 Maio 2024 - 7:05AM
Business Wire
84% of U.S. homeowners who were planning to buy
a new home say interest rates have impacted their decision
Discover Home Loans recently conducted a survey to determine
Americans’ intentions for their homes, and whether they are
choosing to renovate their current property or buy a new house that
better fits their needs and personal style.
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84% of U.S. homeowners say interest rates
have impacted their decision to buy a new home. (Graphic: Business
Wire)
The survey found high interest rates are having a profound
impact on American homeowners. 84% who were planning to buy a new
home say interest rates have affected their decision. Of those
impacted, 46% indicated they are no longer looking, 35% are less
committed in their search and 30% have lowered their budget. For
most in this group, rates would need to fall significantly with 66%
of respondents planning to wait for 30-year mortgage rates to dip
below 5% before they would seriously consider purchasing a
home.
“When the Fed does gain confidence that inflation is under
control, rate decreases are likely to be modest and gradual,” says
Rob Cook, vice president of marketing at Discover Home Loans. “In
the meantime, the housing market may remain sluggish. Consumers
should reset their expectations and budgets accordingly.”
Interest rates are also modifying homeowners’ preferred
financing options. Only 9% of homeowners plan to use a cash-out
refinance for their home improvement project, down significantly
from 24% in 2023. “Homeowners are understandably avoiding lending
options that would impact the rate they currently have on their
primary mortgage,” says Cook. “In this rate environment, home
equity loans are an attractive option as they allow homeowners to
leverage the available equity they have in their homes without
modifying their existing mortgage.”
Inflation also has a significant impact on homeowners’ finances,
with 49% of respondents reducing discretionary spending and 33%
choosing to delay home renovation projects. For those who pursue
home renovations, many are feeling inflation’s impact with 47% of
respondents indicating their project is costing more than they
expected and 30% stating they have reduced the size of their
project.
U.S. Homeowners Are Renovating to Add Personal Style and
Functionality
More than half (55%) of American homeowners would rather
renovate their current home vs. move to a new home (24%) or keep
their home “as is” (21%). In fact, 57% of survey respondents either
have a home improvement project underway or are planning a project
within the next year. For those planning a home improvement
project, 87% want to make cosmetic changes to reflect their
personal style; 84% want to use home improvements as an investment
opportunity; and 73% want to upgrade home features in need of
repair.
Gen Z vs. Baby Boomers: Thoughts on Home Renovations and
Personal Finances
Younger generations are generally more optimistic about their
financial future this year with 48% of Gen Z and Millennial
homeowners expecting their finances to improve over the next year —
compared to only 31% of Gen X and Baby Boomers. Reasons for
renovating a home also differ between generations. Gen Z and
Millennial respondents are more likely to take on renovation
projects that personalize their homes, while Gen X and Baby Boomers
are taking on home renovations to feel a sense of
accomplishment.
Spending and saving habits also differ between generations. Gen
Z, Millennials and Gen X are more likely to expect their home
improvement project to go over their anticipated budgets, while
Baby Boomers are most likely to expect to stay consistent with
their budget. Baby Boomers are less likely to budget for extra
costs, while Gen Z is more likely to save between 11-15% when
compared to other generations.
“As younger generations are building equity and looking to
renovate, they appear to be willing to spend more to create a home
that better reflects their personal aesthetic,” says Cook.
“Meanwhile, older generations are willing to spend on improvements
to keep up with the maintenance of their homes, but not embellish
or completely overhaul.”
Discover has resources that can help determine if home
renovation goals are financially attainable. For example, consumers
can receive an estimated interest rate and monthly payment
breakdown on home renovation financing options by visiting the
Discover Monthly Payment Calculator.
About the Survey
The national survey of 1,500 homeowners was commissioned by
Discover and conducted by Dynata (formerly Research Now/SSI), an
independent survey research firm. The survey was fielded from
February 9th through March 13th, 2024.
About Discover
Discover Financial Services (NYSE: DFS) is a digital banking and
payment services company with one of the most recognized brands in
U.S. financial services. Since its inception in 1986, the company
has become one of the largest card issuers in the United States.
The company issues the Discover® card, America's cash rewards
pioneer, and offers private student loans, personal loans, home
loans, checking and savings accounts and certificates of deposit
through its banking business. It operates the Discover Global
Network® comprised of Discover Network, with millions of merchants
and cash access locations; PULSE®, one of the nation's leading
ATM/debit networks; and Diners Club International®, a global
payments network with acceptance around the world. For more
information, visit www.discover.com/company.
Equal Housing Lender
Discover makes loans without regard to race, color, religion,
national origin, sex, handicap, or familial status.
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version on businesswire.com: https://www.businesswire.com/news/home/20240506832767/en/
Media Contact: Matt Miller Discover mattmiller@discover.com
224-405-0653 @Discover_News
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