Discover Home Loans: Homeowners Leaning Toward Renovation Amid Current Rates

(Image courtesy of Discover Home Loans; Breakout image courtesy of Karolina Grabowska/

Discover Home Loans, Riverwood, Ill., in a recent survey found 84% of American homeowners who were planning to buy a new home said their decisions have been affected by high interest rates.

Of that group of respondents, 46% say they are no longer looking, 35% are less committed and 30% have lowered their budget.

Additionally, 66% said they plan to wait for 30-year mortgage rates to dip below 5% before they seriously consider purchasing a new 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.”

Fifty-five percent of American homeowners said they would rather renovate their current home compared with moving to a new home (24%) or keeping their home as is (21%).

And, 57% say they have a home improvement project underway or planned for the next year; 87% want to make cosmetic changes, 84% want to use home improvements as an investment opportunity and 73% are conducting some sort of repair.

However, only 9% of homeowners plan to use a cash-out refinance for home improvement projects, compared with 24% in 2023.

Looking at spending more broadly, 49% of respondents report reducing discretionary spending and 33% are delaying home renovation projects.

Of those who are in the midst of home renovation projects, 47% said it’s costing more than they expected and 30% said they reduced the size of the project.

By generation, Gen Z and Millennial respondents reported being more likely to take on renovation projects to personalize their homes, and Gen X and Baby Boomers said they’re taking them on to feel a sense of accomplishment.

Gen Z, Millennials and Gen X are more likely to expect their home improvement project to go over budget; Boomers are more likely to stay within their budget.

“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,” Cook noted. “Meanwhile, older generations are willing to spend on improvements to keep up with the maintenance of their homes, but not embellish or completely overhaul.”