Why high borrowing costs are pushing homeowners towards repairs, not remodels
Overseas data shows owners deferring big renovations and prioritising maintenance as borrowing costs bite — here's what that could mean for Australian costs.
Homeowners facing expensive borrowing are increasingly choosing to fix what's broken rather than fund a full remodel — and the same calculation is worth making here in Australia before committing to a big renovation loan.
What happened
According to Oz Arab Media, US mortgage rates climbed above 7.5% this week, their highest level in three years, leaving homeowners who locked in much cheaper rates years ago reluctant to move house. The report says that dynamic is now spilling into renovation spending too: rising costs on home equity loans and HELOCs are making it harder for owners to borrow against their homes to fund upgrades.
Angi co-founder Angie Hicks is quoted in the report saying homeowners are now living in their houses "about five years longer than they originally expected," and the company's own data found 60% of consumers are postponing renovation projects and shifting their budgets towards maintenance instead — things like servicing a furnace or replacing a hot water system, ahead of larger discretionary work such as decks or kitchen remodels.
Retail figures cited in the report back this up. Analytics firm Datavations found big-ticket renovation categories at two major US hardware chains fell between 10% and 28% over the year to August 2026. Shower stalls, kits and enclosures were down 21% and bathtub sales fell 10%, while cheaper items like pull-down kitchen taps dropped only slightly. Datavations' chief executive, Philip Odelfelt, is reported as saying this reflects owners deferring bigger projects rather than giving up on their homes altogether, and a Lowe's executive made a similar point about affordability concerns pushing spending towards repair and maintenance over discretionary projects.
Interestingly, the report notes that second mortgage and HELOC originations rose almost 20% in the second quarter of 2026 compared with the first — but experts quoted say that borrowed money is increasingly going towards managing household finances rather than paying for renovations. A Tulane University business professor cited in the piece summed it up as homeowners skipping cosmetic upgrades and sticking to work that can't be put off. Contractors warned that delaying unavoidable jobs — roofs, windows, heating and cooling — risks more costly damage down the track.
What it could mean here
This is US data, not an Australian survey, so we're not claiming it describes what's happening in Australian households. But the underlying trade-off — necessary repairs now, discretionary remodels later — is one worth running the numbers on if you're weighing up a renovation against tighter household budgets.
The projects described as "unavoidable" in the report map closely to jobs we cost every day. A straight swap of an ageing hot water system typically runs around $2,100, well below a full bathroom renovation at $22,000. A Roof replacement is a similarly binary decision — put it off and you risk water damage inside the house, which costs far more to fix than the $11,700 – $19,500 a replacement runs to. Split-system air conditioning, often framed as discretionary comfort, becomes closer to essential in parts of Australia with hot summers, and sits at $9,000 typical.
By contrast, the big discretionary remodels flagged as being deferred overseas — kitchens and decks — are exactly the projects where Australian homeowners have the most room to scale back rather than cancel. A kitchen renovation ranges from $12,600 at the basic end up to $30,100 for a premium fit-out, so choosing stock cabinets and a laminate benchtop over custom joinery and stone can bring the total down substantially without delaying the job indefinitely. Decking shows the same spread, from $7,750 to $13,700 depending on material and extras like railings and stairs.
Interior painting is a useful middle ground: it refreshes a home without the cost of a structural remodel, typically $6,500, and can be scoped back to walls only if budget is tight.
How we think about it
We cost these projects the way a contractor would quote them — labour hours at local trade rates plus materials, checked against real market prices and quotes — rather than relying on rules of thumb. If you've already got a quote in hand and want to check it's realistic before you commit to borrowing against the house, our "is my quote fair" tool compares it against those same figures. Before taking out finance for a renovation, it's worth getting a clear cost range for the actual job first, then deciding what can wait and what can't.