Last updated: July 17, 2023

Market Insights

The State of Home Ownership in 2023

Inflation Q&A with Rob Cook vice president of Discover Home Loans

The Federal Reserve raised interest rates again in May 2023 to fight inflation. How is this impacting American homeowners’ financial decisions? Rob Cook, vice president of marketing at Discover® Home Loans, provides insights from the latest home loans survey on how homeowners feel about investing in their homes.

Can you give a quick overview of your job with Discover? What do you do and how has it changed over the half decade that you’ve been with the organization?

When I joined Discover Home Loans 6 years ago to lead Marketing, Digital & Customer experience, the business was fairly new. After building out our marketing capabilities and creating an intuitive digital experience, the business has expanded exponentially.

Originations have grown by a factor of 20, and now Discover Home Loans is the #1 originator of home equity loans (closed-end second mortgages) based on total dollar amount and number of loans, according to 2021 data available at the FFIEC Home Mortgage Disclosure Act website. The growth of the business has also resulted in expansion of my responsibilities as I now also lead Product, Pricing and Analytics.

State of Home Ownership in 2023

Discover Home Loans conducts an annual survey that allows us to keep track of how homeowners’ attitudes about home improvement and financing options change or do not change over time.

Can you talk about the recent Discover Home Loans survey?

This year’s survey was fascinating as it really highlighted how homeowners were reacting to and managing inflation and higher interest rates.

Inflation’s impact was reflected in the survey, which found that over half (59%) of respondents have chosen to postpone their projects in the face of increased repair costs. Additionally, over a quarter (26%) say they cut out part of their projects due to inflation.

Higher interest rates are causing many to reconsider buying new homes with 42% stating they are no longer looking for a new home and another 21% are looking but are less set on buying one. In the same vein, many are choosing to focus on home improvement with 8 of 10 (79%) of homeowners surveyed still prefer to renovate their current house rather than move to a new home.

This shows homeowners view home improvements as a way to increase the value of their property, despite high home improvement costs. With large amounts of existing home equity untapped, a home equity loan is an attractive option for many homeowners looking to finance large-scale renovations or consolidate their debts.

Woman sitting on her roof with newly installed solar panels

More than half of surveyed homeowners are planning eco-friendly updates as part of their renovations.

Are there any trends within the home loans space you want to call out in particular?

Our recent survey findings show more homeowners are looking to update their appliances, remodel their existing bathrooms or remodel an existing kitchen than last year. 59% of homeowners plan to fit “green” or “eco-friendly” updates into their renovation plans. These improvements may increase a home’s value in the long run, making them a smart choice for homeowners.

In fact, 80% of homeowners surveyed agree they’re making improvements as a way to invest in their home. It’s important for homeowners to plan ahead and understand their budget before starting their renovation projects. Homeowners should research current home loan options to get the best deal possible. Loan calculators from Discover can help homeowners determine how much they may be able to borrow and what monthly payments might look like.

There were also some interesting generational trends that we identified in this year’s survey, with younger homeowners expressing an interest in remodeling their homes. Per the survey, over a quarter (28%) of Gen Z and Millennials said they were working on a project, compared to 17% of Gen X and 10% of Baby Boomers. 27% of Gen Z and Millennials said they plan on making a home improvement in the next three months, compared to 21% Gen X and 11% of Baby Boomers.

What difficulties are homeowners facing when it comes to affording renovations?

According to this year’s survey, Americans are having difficulties dealing with the impact of rampant inflation when it comes to their home improvement projects. 44% of respondents said that their project is costing more than they budgeted for or expected and more than a quarter (26%) said they had to cut out part of their project.

Inflation is also impacting those seeking to buy a new home, with 42% of respondents saying that they are no longer actively looking. When asked why they would rather renovate their current home versus buying a new one, 26% of homeowners said it’s less expensive than buying a new home – up 4% from 2022.

Since home equity loans are typically taken out as second mortgages, they allow homeowners to keep their existing primary mortgage. This may be beneficial if they already have a low rate on their current mortgage. Another benefit is that home equity loans typically offer lower rates than credit cards and personal loans.

They also provide the certainty of a fixed interest rate, unlike home equity lines of credit (HELOCs). Rising home improvement costs and declining home values could potentially impact homeowners' willingness to tap into their home equity, but there are a range of other factors that can influence their decision such as financial needs or long-term plans for the property. Discover offers informative resources to help homeowners reach a decision about what works for their situation.

What advice would you give to homeowners?

No matter where consumers are in their home journey, they should research current home loan rates and compare their options to get the best deal possible. Since rates have increased dramatically over the past year, consumers need to understand how those higher rates will impact the monthly payments they would need to pay as part of a mortgage refinance or home equity loan. Online tools like this monthly payment calculator from Discover can help consumers determine the maximum value of home they can afford.

Homeowners who are looking to take cash out of their homes will likely find it more advantageous to keep their first mortgage and take out a home equity loan as a second lien, but that isn’t their only option.

A cash out refinance offers the opportunity unlock home equity by refinancing at a higher loan amount than an existing mortgage to receive the difference in cash. While refinancing is typically a more popular choice when homeowners can get a better interest rate than they have on their existing mortgage, the decision ultimately depends on what works best for someone’s unique financial situation.  At Discover Home Loans, we encourage homeowners to take a look at what options might fit in their budget with tools such as our loan amount or refinance savings calculators. 

Single family home in Autumn

Homeowners should research current home loan rates and compare their options to get the best deal possible.

Why is a Discover home equity loan an attractive option for homeowners?

A home equity loan lets you borrow money from the equity in your home. Money borrowed with a home equity loan is yours to use for any needs. Discover lets you borrow $35,000-$300,000 in one lump sum with no origination fees, no appraisal fees, and no cash due at closing. We do this while delivering the great customer experience that customers expect from Discover with helpful personal bankers and intuitive digital tools.

What are your thoughts on how active the Fed has been raising rates? And how does that impact home loans, etc.?

Whenever the Federal Reserve changes the rates they charge banks to borrow money, it could have a potential impact on home equity interest rates, although the degree of impact will depend on a few different things. If the Federal Reserve lowers rates to spur growth in the economy, it is possible that home equity interest rates could hold steady or decline as the cost for banks to borrow money is reduced.

Conversely, if the Federal Reserve increases rates due to concerns about inflation, it is possible that home equity interest rates could rise. Inflationary pressures can lead to higher borrowing costs, which could impact the interest rates offered on home equity loans.

There are many other factors that may also influence rates for home loans.  For instance, changes in lenders’ outlook on the economy, property value trends and credit trends can all impact interest rates at any time regardless of any action the Fed takes.

Do you plan on renovating any part of your home? If so, what do you plan to do?

My family recently moved to an older home and immediately undertook some significant renovations including remodeling our primary bedroom suite and installing new flooring. We are currently planning on refreshing our kitchen in the coming months. We are pretty settled on our location, so while these investments should enhance the value of our home, our primary motivation is to make changes that are going to increase the enjoyment of our home.

About the Survey

The national survey of 1,500 homeowners was commissioned by Discover and conducted by Dynata (formerly Research Now/SSI), an independent survey research firm. The surveys were conducted online; the first was fielded from January 19th through January 29th, 2023. The maximum margin of sampling error was +/- 2% with a 95% level of confidence.

Please note: Discover Home Loans offers low, fixed rates on home equity loans and mortgage refinance options, but does not offer HELOCs. If you’re looking to tap into your home equity to finance home improvements, consolidate high-interest debts, or pay for other large expenses, check out more about what to expect during the application process.


Start your application online or give us a call.

  • Weekdays 8am–Midnight ET
  • Weekends 10am–6pm ET