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Everything you need to know about interest rates

Posted April 22, 2024 by EnerBank USA

Everything you need to know about interest rates

In 2023, between increasing rates, low inventory, and high home prices, more homeowners have turned to remodeling their current home as opposed to moving. So, what happens next? Let’s take a closer look at the impact interest rates have had on the home improvement industry as well as predictions for the future.

How We Got Here

Last year, the Fed raised interest rates four times for a total increase of 1.00%. During their past few meetings, however, they’ve held rates constant and appear to be at the end of their rate hiking cycle. Based upon the current trajectory, most think the Fed will begin cutting rates by May.


Paying for home improvement projects in cash or a credit card remain the two dominant sources of repayment. However, given the higher interest rate environment, contractor-arranged financing became the most common other type of loan to finance home improvement projects*, according to the Home Improvement Research Institute.

Where We’re Headed

Given the recent instability, economists don’t appear to agree where mortgage rates will end in 2024, and their estimates are within a range of anywhere between 5.7% to 6.8%. But with mortgage rates remaining below 5% for more than a decade leading up to 2022 and more than three quarters of homeowners in the US locked in with rates below 5.5%, potential borrowers would likely remain hesitant to make a move even if rates dipped to the low end of the range.

The combined impact of mortgage rates in relation to current housing prices is meaningful as well. Coupled with mortgage rates, home prices are thought to sustain home affordability challenges in 2024.

How Can You Prepare?

Making sure your home improvement business has the tools and resources it needs to be successful is more important than ever. As stated above, increased interest rates have helped contractor-provided financing increase in popularity.

Offering your own financing can help you in a few ways. First, you can stay a step ahead of price objections, helping you to close more jobs. Second, you can beat out the interest rate that comes along with other payment options, making yourself an attractive option for homeowners. Finally, you can stand out from the competition by mentioning payment options in your advertising, helping you to bring in more leads.

The Next Steps

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*December HIRI Monthly Homeowner Tracker pg. 8.


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