Homeowners stay put as lower rates offer wealth building, debt consolidation

Many American homeowners who bought a home with a fixed rate mortgage before the spike in rates in 2022 may opt to take advantage of their home’s growing value as the housing market rebounds.

But that doesn’t mean selling up and moving on, because with tight supply set to be exacerbated as demand grows, the potential increase in prices is seen as a great opportunity for building wealth and increasing financial security. Although the gains may be at a slower pace than they have been.

A new report from TD Bank shows that two-thirds of respondents who are current homeowners see their home as a source of generational wealth and 60% said that the low interest rates they secured on their mortgage have influenced their decision not to sell in the near future. Millennials and Gen Zs are more likely to see their home as a wealth builder for the future (around 70%).

“Homeownership is not just about having a place to live—it's a critical component of financial security and building generational wealth,” said Steve Kaminski, Head of US Residential Lending at TD Bank. “With interest rates expected to continue to drop over the next year, home prices and equity values will fluctuate alongside the US housing supply. We’re finding that home equity is playing a bigger role in helping homeowners stay financially flexible.”

While mortgage rates are expected to level out at around 6% in 2025 having surged to close to 8% late in 2023, this is still well above the average rates in January 2021 which fell to an all-time low of 2.65%. Those who locked in rates at the lower end may also choose to take advantage of a Home Equity Line of Credit to consolidate other debts at a more favorable rate. More than eight in ten respondents have non-mortgage debt with 62% of those owing at least $10K.

But HELOCs are also being considered, especially by younger generations, to finance home renovations to boost the value of their home, or to improve their long-term financial strategies.

"By leveraging equity, homeowners are making essential upgrades and investing in the longevity and value of their property," said Jon Giles, Head of Residential Lending Strategy & Support at TD Bank. "When used responsibly, home improvements can benefit a borrower by not only adding value to their home but also enhancing their quality of life. That's why it's important to speak with a mortgage professional to identify the purpose and potential impact of using your equity, ensuring it meets long-term financial goals."