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• Apr 3, 2017

Although the Fed's recent interest rate hike signals renewed confidence in our economy and job market, many homeowners and home equity line of credit (HELOC) borrowers are questioning how this increase will impact their loans. According to recent research from TD Bank, America's Most Convenient Bank®, both current and potential borrowers put interest rates at the top of their lists as a deciding factor when it comes to taking out a loan.

Among the roughly 1,350 homeowners surveyed nationally in early March for TD Bank's second annual Home Equity Sentiment Index, nearly half (46 percent) of respondents said interest rates were the most influential factor in taking out a HELOC. This is in comparison to all other options, including fees, loan amount, draw period length and even trust in their lender.


"Although the rate increase may worry some HELOC borrowers, they should keep in mind that a rate increase of .25% is going to have a minimal effect on their monthly payment," said Mike Kinane, General Manager, Home Equity Products, TD Bank. "But, if a borrower is concerned with potential increases in rate, they should contact their lender to learn more about HELOC features, such as converting all, or a portion, of the balance to a fixed rate option."

Here is an overview of the results from the 2017 Home Equity Sentiment Index Survey:

Interest Rates are on the Forefront of Homeowners' Minds

  • Almost half (46 percent) ranked interest rates as the most influential factor when deciding on a HELOC, more than double the second most influential factor cited, which was loan amount (18 percent)
  • Thirty-six percent of respondents find lower interest rates the most valuable aspect about using a HELOC compared to other borrowing options

Millennials are Strategic in Using a HELOC

  • More Millennials (39 percent) are HELOC users than Gen-Xers (31 percent) and Baby Boomers (31 percent)
  • Thirty-five percent of Millennials are considering applying for a HELOC within the next 18 months, more than twice as much as Gen-Xers (15 percent) and nine times as much as Baby Boomers (4 percent)
  • More than half (64 percent) of Millennials would use a HELOC for renovations
  • While Millennials (45 percent) want to renovate their home to increase its overall value, Gen-Xers and Baby Boomers primarily renovate to make their home, or a certain room, more 'up to date' (40 percent and 38 percent, respectively).

"Although most borrowers choose to use their HELOCs for home renovations, they should remember that this money can be used for almost anything, including paying off student loans or buying a car," said Kinane. "There is also a misconception that a HELOC works like other loans, but it is truly a line of credit. The consumer is in control of when and how much money they want to draw, and they are only paying on the portion they are actually using, therefore having greater control over interest charges."

The Borrower-Branch Relationship Persists

  • Half of respondents (50 percent) would meet face-to-face with a lender in a branch to apply for a loan, while almost a quarter (24 percent) would prefer to apply online
  • Almost half (44 percent) of respondents research their home renovation financing options by speaking to their bank/lender
  • One-third (29 percent) of HELOC users said that they are only somewhat or not confident in their knowledge of HELOC loans and how to use them

"It's encouraging to see so many people – especially the younger generation – taking advantage of the increase in their home equity through a HELOC, but at the same time, it's surprising that many HELOC users lack confidence in their knowledge about how to use them," said Kinane. "Lenders can answer questions, dispel myths around HELOCs and educate to build borrowers' confidence."

Survey Methodology

The HELOC study was conducted by research company Maru/Matchbox. Respondents were composed of a nationally representative sample of 1,356 American homeowners, with a margin of error of +/- 2.7 percent. Interviews were completed from March 3 through March 9, 2017. Data has been weighted by age, gender and region to reflect the population.

About MARU/Matchbox

MARU/Matchbox is a professional services firm dedicated to improving its clients' business outcomes. It delivers its services through teams of sector-specific research consultants specializing in the use of Insight Community and Voice of Market technology.

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., providing more than 9 million customers with a full range of retail, small business and commercial banking products and services at more than 1,200 convenient locations throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida. In addition, TD Bank and its subsidiaries offer customized private banking and wealth management services through TD Wealth®, and vehicle financing and dealer commercial services through TD Auto Finance. TD Bank is headquartered in Cherry Hill, N.J. To learn more, visit . Find TD Bank on Facebook at and on Twitter at .

TD Bank, America's Most Convenient Bank, is a member of TD Bank Group and a subsidiary of The Toronto-Dominion Bank of Toronto, Canada, a top 10 financial services company in North America. The Toronto-Dominion Bank trades on the New York and Toronto stock exchanges under the ticker symbol "TD". To learn more, visit .

For further information: Jenni Huston, TD Bank, Office: 856-533-7304, Cell: 856-924-0833,

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