High Rates Choke Home Equity Use, Threatening Consumer Spending & Remodeling

Rising interest rates are making home equity loans (HELOCs) too expensive for home renovations, forcing homeowners to use them to 'stay afloat' rather than for improvements 🔗. This trend is a direct consequence of the Fed's policy to curb inflation by reducing consumer spending 🔗.

Key impacts:

• Consumer Spending: High rates are expected to particularly hit big-ticket items like home renovations, further slowing consumer spending which is already lagging as a GDP driver 🔗.
• Economic Risk: The economy has little cushion due to a soft jobs market, declining wage growth, and high energy prices, making consumer spending weakness a significant risk 🔗.