For homeowners, the grass still feels greener where they currently live, with many deciding to stay in place for the near future.
Three-quarters of owners want to stay in their current residence, with the primary driver being the elevated interest rate environment, according to a new survey published on Tuesday by TD Bank. Nearly six in 10 cited the rate of their current mortgage as a reason not to move.
The results are not good news for those frustrated by the sluggish real estate market. Although interest rates have moderated somewhat, and the inventory of homes on the market has begun to climb, a great many remain content to stay on the sidelines.
Many have mortgages with rates well below those topping 6% today for a 30-year mortgage.
"In real terms, people who locked in a mortgage have a real borrowing cost of essentially 3%. It’s not surprising that people would not be keen to sell their existing homes," said Bryan Cutsinger, an economics professor at Florida Atlantic University, adding those who do buy will likely have to pay more for less under existing interest rate conditions.
Conducted in August, the TD Bank survey sampled 2,012 owners who purchased their residence with a mortgage loan in the past decade. It found that about 30% of respondents said they have turned to a home equity line of credit, or HELOC, to pay off other debt or build a financial safety net. Owners can tap into this type of loan by using their equity in the residence as collateral, meaning that if they fail to repay it, the bank can take action.
“Although recent interest rate reductions have begun to shift the housing conversation, overall activity remains subdued, as many homeowners are reluctant to move and forego their current favorable mortgage rates,” said Steve Kaminski, head of residential lending at TD Bank, in a statement. “As a result, we are seeing an increasing number of individuals leveraging their home equity as a means to enhance their financial position.”
Owners considering a HELOC loan see favorable financial conditions. Credit rates dropped to their lowest since 2023, according to a new report by the financial site Bankrate.
Roughly two-thirds (67%) of homeowners have at least $100,000 in equity in their homes and nearly the same percentage said they are currently renovating or planning to renovate their homes in the next two years, the TD Bank survey found. Those who decided to tap their equity were led by homeowners in Gen Z (41%), followed by millennials (38%)