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66% of young homeowners plan to renovate this year: BofA

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Bank of America’s 2021 Homebuyer Insights Report details how more young homeowners are looking to renovate their homes with DIY projects as well as break down how different generations plan to fund home improvement projects amid the pandemic. Ann Thompson, Head of Specialty Lending for Bank of America, joins Yahoo Finance Live to discuss.

Video Transcript

- The home remodeling market still has further room to run after big year in 2020. At least, that's the read from a new survey out of Bank of America, which took a look at renovation trends across the country. Ann Thompson is especially lending executive at Bank of America and joins us now.

And good to see you this morning here. Where are folks renovating? Where are they spending this year? What part of the house?

ANN THOMPSON: They're spending on-- on where they enjoy living. So they've been at home for-- they've been at home for months and months. So if you look at inside versus outside, they're-- they're renovating inside.

They're renovating their kitchen over their baths. They're renovating their master bedroom versus their home office. And so it's really focused on enjoyment.

And the home as both family center and where they work. And traditionally, these projects have been measured this has been interesting. Traditionally, the projects have been measured versus a return on investment. And now, there's really a focus on greater enjoyment of the living space.

- And I'm curious about that dynamic considering the value of homes pretty much across the country has gone up. And so one wonders if you're able to say, well, I just want to have a nicer home. And the market takes care perhaps of the rest of it for you in some way.

ANN THOMPSON: Sure. So home prices went up from December 19 to December 2020 to 10%. So people are thinking about tapping into that equity to-- to improve their living space. Because the home buyer market is just on fire in so many markets. And it's so competitive. The people are sort of rethinking and looking at how can I improve this space, and how can I customize it to my own family's enjoyment.

- And how are they-- how are these remodels? How are they funding these big projects?

ANN THOMPSON: You know, it varies. Obviously, savings for one. But tapping into that equity, which is at an all time high versus a home equity line of credit. You know, it's-- it's a solution that doesn't have upfront fees. And steps right in that equity makes that equity work for them.

And I think another way is some people are liquidating stocks and bonds are borrowing against their stocks and bonds. So multiple different ways. Also, I would say credit card.

Depending on what you're doing, some credit cards offer some great rewards travel or cash rewards. For appliances, hardware, things like that, that might be financed on your credit card. Or a mixture of all three or four.

- Yeah. And I'm curious how customers are thinking about home equity lines of credit. Given the bad reputation perhaps. We can say that, that this specific instrument garnered 15, 20 years ago or so.

I mean, it's not evil, right? It's-- it's something that's out there. And just how folks are thinking about the ability to use their equity in their home today versus where that may have been just a few years back?

ANN THOMPSON: Yeah. So I mean with equity at all time high, it just makes sense. It's I think probably a justifiable wrap a few years ago. Actually, several years ago now.

But you know, we-- we look at every client. Make sure they can repay. I think that's key.

And that the equity is there. And so it's-- it's definitely. I think the no cost feature is great.

We also have a very low introductory rate right now. Less than prime rates. So that's something that's appealing. And so oftentimes, we see kind of a mix.

- And you have inspired me to change my rug. And maybe knock down a wall or something. Well, we'll leave it there. Bank of America, especially lending executive, Ann Thompson, good to see you.