LendingTree Finds More Home Equity Loans Are Being Used for Home Improvement Amid COVID-19 Crisis
With millions of Americans cooped up inside their homes during the coronavirus pandemic, many homeowners have taken on home improvement projects. While some of the projects are relatively simple and inexpensive, others can become very costly. To pay for these upgrades, some homeowners are taking out home equity loans.
While the total number of home equity loan applications has fallen since January, a new LendingTree study found that those who do apply for a home equity loan are more likely to use it to pay for home improvements than they might’ve been at the start of the year.
To analyze where home equity loans are most likely to be used for home improvements, LendingTree ranked the nation’s 50 largest metros based on what share of home equity loans in each area are designated for home improvements. On top of that, LendingTree also created a separate ranking based on which metros have seen the most growth in the share of home equity loans used for home improvements from January 2020 to April 2020.
Key findings
Across all 50 metros, an average of 45.9% of home equity loans are being used to make home improvements.
Milwaukee, Louisville, Ky., and Columbus, Ohio, are the metros with the largest share of home equity loans meant for home improvements. Across the three metros, the average share of home equity loans used for home improvements was 61.1%.
San Jose, Calif., Hartford, Conn., and Raleigh, N.C., are the metros where home equity loans are used the least for home improvement at 34.3% on average.
The share of home equity loans designated for home improvement grew from January 2020 to April 2020 in all but eight metros. The average growth rate of home equity loans for renovations across all 50 of the nation’s largest metros was 25%.
Growth in the share of home equity loans taken out for home upgrades was the highest in Milwaukee, Nashville, Tenn., and Birmingham, Ala., and it was the lowest in San Jose, Calif., Raleigh, N.C., and Hartford, Conn. The average growth rate was 85.2% in the top three metros and -19.3% in the bottom three.
Metros with the largest share of home equity loans used for home improvement
No. 1: Milwaukee
Share of home equity loans designated for home improvement: 66.7%
No. 2: Louisville, Ky.
Share of home equity loans designated for home improvement: 60.0%
No. 3: Columbus, Ohio
Share of home equity loans designated for home improvement: 56.6%
Metros with the smallest share of home equity loans used for home improvement
No. 1: San Jose, Calif.
Share of home equity loans designated for home improvement: 30.8%
No. 2: Hartford, Conn.
Share of home equity loans designated for home improvement: 36.1%
No. 3: Raleigh, N.C.
Share of home equity loans designated for home improvement: 36.2%
Metros with the largest percentage increase in the share of home equity loans used for home improvement
No. 1: Milwaukee
Percentage increase in share of home equity loans designated for home improvement from January 2020 to April 2020: 96.7%
No. 2: Nashville, Tenn.
Percentage increase in share of home equity loans designated for home improvement from January 2020 to April 2020: 87.0%
No. 3: Birmingham, Ala.
Percentage increase in share of home equity loans designated for home improvement from January 2020 to April 2020: 72.0%
Metros with the largest percentage decrease in the share of home equity loans used for home improvement
No. 1: San Jose, Calif.
Percentage decrease in share of home equity loans designated for home improvement from January 2020 to April 2020: -39.5%
No. 2: Raleigh, N.C.
Percentage decrease in share of home equity loans designated for home improvement from January 2020 to April 2020: -11.8%
No. 3: Hartford, Conn.
Percentage decrease in share of home equity loans designated for home improvement from January 2020 to April 2020: -6.7%
Methodology
The data in this study is derived from more than 45,000 LendingTree users who submitted requests for home equity loans from Jan. 1-April 30, 2020.
LendingTree research analyst Jacob Channel contributed to this study.