Home equity is 'a less expensive borrowing option'

Among polled homeowners, 55% see home improvements or repairs as a good reason to tap home equity, according to a new survey by Bankrate. The site surveyed 2,294 U.S. adults, including 1,133 homeowners, in late June. Using home equity is "certainly a less expensive borrowing option than resorting to personal loans or credit cards," McBride said. As of Aug. 7, the current average home equity loan interest rate is 8.59%, according to Bankrate. The average HELOC interest rate is 9.37%. To compare, the average personal loan interest rate is 12.38% , Bankrate found. The average credit card interest rate stands at 24.92%, according to LendingTree.

While cash from savings continues to be the most common way homeowners fund renovation projects, or 83%, credit card use has increased, according to the 2024 U.S. Houzz & Home Study. Houzz surveyed 33,830 homeowners of ages 18 and older from Jan. 19 to Feb. 27. About 37% of homeowners paid for their repair projects with credit cards, up from 28% who did so in 2022, Houzz found. While tapping equity is cheaper, it still has risks. Rates are higher given the Federal Reserve's spate of rate hikes, and you need to go in with a plan to pay off the debt.

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