Homeowners have declining expectations for increases in home value, according to an annual survey conducted for ING Direct, a federally chartered savings bank that offers home mortgages and other products.

Homeowners who participated in the survey said their home has increased in value by about 6 percent over the past 12 months, and they expect their home’s value to increase by about 4 percent in the next 12 months. Homeowners in New England and Pacific states are the most likely to cite increases, while those in South Central states are the most likely to say their home’s value did not change, ING Direct reported.

But most homeowners don’t fear a bubble – about 74 percent of respondents who have owned a home for at least three years stated that they “were not very concerned that there might be a downturn in the housing market in the next year, which would lower the value of their home,” according to an announcement today by ING Direct.

About 9 percent of respondents who experienced an increase in their home’s value during the past three years say that the increase has allowed them to spend more than they earn annually. About two-thirds believe a 10 percent decrease in home value would have no impact on day-to-day spending.

About 85 percent of participants said they believe their home increased in value during the past three years.

Synovate, a market research arm of Aegis Group, conducted a telephone survey in April and May 2006 of 1,000 people using a continental U.S. Census-balanced group of homeowners with residential telephone numbers.

Qualified respondents who participated in the survey were at least partially responsible for making mortgage decisions and had owned a home for at least three years. Final data were weighted on respondent gender and geographic region to be nationally representative of homeowners, according to the company announcement.

Homeowners are most likely to consider their home to be an investment or a place to live when they retire. One in four think of their home as a source of extra income to draw from when cash is needed, according to the study. “This is reinforced by the ING Direct finding that … 8 percent of homeowners say they refinanced in the past three years and received cash back,” according to the announcement.

About 71 percent of respondents said they expect home mortgage rates to increase, while 21 percent said they believe it will remain the same, according to the study.

On average, homeowners who have owned a home for at least three years feel that new mortgage interest rates will increase 1.6 percentage points over the next 12 months, with 50 percent expecting an increase between one and two percentage points. About 16 percent anticipate a jump of three to four percentage points.

The survey suggests that there is a need for lenders to be transparent in the total cost of a mortgage, ING Direct reported.

Respondents who report that closing costs were higher than they originally expected say the closing costs they paid on their current mortgage were almost $600 more than anticipated, the survey revealed.

“It is important for borrowers to be educated and know the total cost of their mortgage, including any fees or closing costs,” said Arkadi Kuhlmann, president and CEO of ING Direct. “It’s really up to the industry to improve the mortgage experience by offering simple, straightforward products.”

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