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This year is shaping up to be “The Year of the Home Improvement” according to a number of sources both inside and outside of the home improvement and financial industries. While the last year and a half has been rough on the housing market as well as the home remodeling industry, the latest news shows that there might be some light at the end of the tunnel.

Make no mistake about it: This year is looking to be a pretty good year to start that large home improvement project even if it means borrowing money or financing the project. Home improvement retailers such as The Home Depot and Lowe’s are reporting better than expected sales and have begun to see larger projects and busier contractors coming in the door.

Two things are happening to drive the increased demand for home improvement. First, people who haven’t been able to sell their homes are giving up and taking the plunge into remodeling now that they feel the economy isn’t going to get much worse. And second, the overall cost of home remodeling has actually gone down over the past year or two as contractors and retailers have lowered their prices to stay competitive with one another. This demand, combined with the weak economy, has actually made for a very attractive home improvement loan environment. There are also a lot of people taking advantage of first time home buyer incentives and tax rebates and they are combining that extra saved money with a small home loan so that they can get a kitchen or bathroom upgrade that they otherwise couldn’t afford.

Here are some of the reasons you may want to go for a larger home improvement this year rather than put it off for another year or two:

Low Loan Interest Rates: Bank rates are still the lowest they’ve been in years for personal loans, mortgages and just about any sort of loan you can think of. Interest rates haven’t risen significantly yet, but as the economy picks up steam loans will begin to slowly get more and more expensive. This is a case of striking while the iron is still hot. Years from now people will look back at the home improvement loan rates of today and wish they could get a rate this low.

Low Contractor Rates: A lot of contractors are starting to get busier, but many probably haven’t raised their rates or really adjusted how they’ve done business for the last year or two. Many are still going to be grateful to get any chance at all for regular work. As the weather gets better and the home improvement season wears on more contractors are going to raise their rates just to deal weed out the serious offers from non-serious offers.

Home Prices Are Rising: This may not seem like a good thing, but it actually is. As home prices slowly begin to rise again it means that the value of what you are putting into your home is also rising. That means that if you spend $30,000 on a kitchen remodel this year and then decide to sell your home a year from now you could actually end up making money. Rising home values means people will begin to have more equity in their homes over time, which means the home improvement market will continue to grow as people begin borrowing against that equity again in the next few years.

Overall, this year looks as though it may be the year to apply for a home improvement loan. Banks are still being conservative with their money, but you may qualify for a special loan such as a VA home improvement loan, an FHA home improvement loan or any one of a number of state or local home improvement loans that we’ve detailed here in the past.