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Homeowners are stepping up their renovation game this year, which could be good news for home improvement financing, but bad for the overall housing market.
Homeowners planning to make home improvements in 2019 surged 26% from a year ago to 73%, according to a survey by SunTrust bank division LightStream, which was conducted by research company The Harris Poll.
A greater interest in renovations this year could mean more opportunities for mortgage lenders to offer home improvement loans or help borrowers utilize their home equity. The amount homeowners plan to spend is also on the rise, as the average spending amount hit $9,000, the highest this figure has been since 2014 when this survey began. Consumers looking to shell out $25,000 or more shot up 83% from a year ago.
“Unsecured home improvement loans can provide immediate financial means, flexibility and low, fixed interest rates for any project,” said Todd Nelson, senior vice president of strategic partnerships at LightStream.
While an increase in renovations opens more doors for lenders, it also means that homeowners are likely to age in place and extend homeownership tenure, which won’t help the inventory crisis. A shortage of home supply has pushed up property values and eliminated some potential buyers, also struggling with rising mortgage rates, from the market.
“The majority of homeowners are planning on staying in their homes for at least 10 years — or never move,” said Nelson.
For reference, the national average homeownership tenure back in the first quarter of 2001 was 4.25 years, according to Attom Data Solutions.