CNBC Features Facet Insight on Home Equity and Remodeling Costs
CNBC highlighted practical financial advice from Tom Graff on evaluating home equity options in a shifting interest rate environment.
As rates keep rising, tapping into home equity will become more and more expensive for homeowners. This will generally hold back consumer spending, but it will hit big-ticket items, like home renovations, particularly hard.
The Fed is hiking interest rates in an attempt to control inflation. One of the ways that is supposed to work is by pushing down consumer spending. So the fact that consumers will struggle to finance large purchases is by design.
Consumer spending is already lagging way behind as a driver of GDP growth. Spending on data centers is really driving GDP growth and holding the economy together. If that were to slow even mildly, the economy could easily fall into recession.
Retailers are adding SKUs and distribution, which masks the fact that the customer walking in with a renovation project is increasingly absent.