The lock-in effect is persisting as mortgage rates stay above 6%, leading homeowners to increasingly opt to stay put and invest in renovations rather than move, according to a new survey from Citizens Financial Group.
The survey points to a growing “stay and upgrade” trend, with 44% of homeowners saying that renovating their current home is the most realistic housing option over the next few years. Just 13% say buying a home feels achievable in today’s economic environment.
“Homeowners are redefining success and taking a more pragmatic approach to their living situation,” Fabien Thierry, head of home equity lending at Citizens, said in a statement. “Today, more homeowners define success as feeling financially secure where they are (43%) and investing in their current home to make it work long term (31%), and that shift is changing how they think about home improvements and financing needs.”
Many homeowners cite the cost of purchasing a new home (36%) and the desire to keep their current mortgage rate (19%) as key reasons for choosing renovation over relocation.
Demand for home improvement remains strong, with 71% of homeowners planning a renovation project within the next two years. Two-thirds (66%) say they would be willing to sacrifice other major purchases to fund these projects.
At the same time, the survey highlights growing financing needs alongside a lack of understanding. Nearly two-thirds (63%) of homeowners say they are likely to need financing for a home purchase or improvement within the next five years, but 39% say they do not understand how financing options work.
In the survey, homeowners pointed to several areas of confusion, including hidden fees (27%), uncertainty around using home equity except in emergencies (32%), and limited familiarity with home equity options overall (27%).
In an interview with HousingWire, Thierry said that Citizens is focusing on digital tools and education to improve client understanding and experience to mitigate the confusion.
“There’s some work that needs to be done around fee transparency, reframing the product [and explaining] what it is. I think there’s some basic awareness in education that still needs to happen, and that came very clearly through that survey. What we are doing at Citizens is investing in our positioning overall,” he said.
Part of investing in the company’s positioning is adjusting its marketing strategy.
“We have evolved over the last couple of years, where we started now just having a lot of content that exists, like video content that exists on platforms such as YouTube, where now we provide a lot of education on what the product is and how that could be a good fit for those clients.”
Affordability concerns are also shaping renovation choices. Nearly two-thirds (64%) of homeowners say they are focusing on necessary repairs or replacements, while just 17% are pursuing discretionary or luxury upgrades. Cost pressures are also pushing more homeowners toward do-it-yourself projects, with 30% opting to handle renovations themselves rather than hire outside help.
“I think the renovation wave is definitely here to stay,” Thierry said. “Over the years, that product has been more useful for a rainy day fund or emergency fund. We’re seeing now that homeowners are adapting it and using it as a financial tool, and renovation is a great example of how that product is getting used.”
Thierry added that, in addition to renovation, homeowners are using their home equity for debt consolidation and financial planning purposes.
“The trend that we’re seeing is the convergence of affordability, elevated rates and compressed inventory overall,” he said. “It’s been interesting, though, looking at how homeowners are reacting to this. … They are adapting to the situation rather than waiting for that perfect scenario where everything will align, but rather they decided to go and invest in their existing homes.”
