Continued inaction on Gov. Charlie Baker’s housing choice bill and bans on natural gas connections are likely to negatively impact housing production in Massachusetts. 

Home equity lines of credit could be a major opportunity for lenders in coming years because many homeowners simply don’t know what they are.

That’s according to a recent study conducted by TD Bank, which found that nearly half of homeowners (48 percent) plan to renovate their homes in the next two years, and a third of those homeowners expect to spend more than $50,000 on their renovations.

TD Bank’s Home Equity Trend Watch is a national survey of more than 1,800 homeowners, which examines trends in home equity usage and home renovations.

The findings reveal that many homeowners are dipping into their savings (48 percent) and checking accounts (34 percent) to fund renovations. A quarter (25 percent) say they will borrow through a HELOC, and a similar portion will utilize a personal credit card (24 percent) or a personal loan (18 percent).

Furthermore, the survey also uncovered several gaps in understanding home equity.

Nearly a quarter (23 percent) of homeowners said they could not define a HELOC. Almost a third (32 percent) of homeowners did not know the current equity in their home and one in six (16 percent) homeowners did not understand the impact of fixed versus variable rates on monthly payments.

“We’ve found that many homeowners simply aren’t aware of how they can leverage the equity in their homes,” Jon Giles, head of home equity lending at TD Bank, said in a statement. “Home equity financing is ideal for projects that will add value to one’s home, such as a renovation. It’s also frequently tapped to consolidate higher interest rate debt, or to help with education expenses. At TD, we are working to increase awareness and education so that more homeowners can take advantage of their home equity when they need it.”

As of late 2018, the average U.S. mortgage holder had more than $113,000 in equity in their home, which is calculated by subtracting their mortgage balance from the current appraised value of their home. Yet much of that equity remains untapped. Just a third (36 percent) of survey respondents said they have had a home equity loan or HELOC.

“While there are many viable options for funding a renovation, a home equity line of credit is one of the most affordable ways to borrow,” said Giles. “During a HELOC’s 10-year draw period, it functions much like a credit card, whereby you can draw funds when you need them. But while credit cards typically carry interest rates around 17 percent, a well-positioned borrower seeking a HELOC can secure rates close to the Federal Reserve’s prime rate, which is currently around 5.5 percent. This also provides flexibility, as most homeowners won’t want to draw on cash reserves or savings when unexpected expenses arise.”