Much of Main Street shares Wall Street's concerns about the impact of new duties the United States has been planning to impose on other countries as a negotiating tactic, which President Trump has acknowledged could put temporary strain on consumers.
Nearly one quarter or 74% of consumers that home-equity investment platform Point surveyed fear
"Even if we aren't necessarily seeing impacts of tariffs on prices today, quite yet, people have internalized this fear that price hikes are coming down the line," said Aaron Terrazas, an economist at Point.
Why tariff fears could be an opportunity in home equity lending
Point suggests this means the perception that duties President Trump is using to renegotiate better U.S. trade may ultimately lead more interest in home equity investment for homeowners with lower savings rates.
Most or 68% of homeowners have six months of savings or less, Point found. One quarter of them have less than one month's worth. The percentage of consumers that said tariffs have made them feel "unsure about their personal finances" has risen to 42% from 36% last year.
"People are worried that a new round of price increases could really jolt their personal finances, and they're not necessarily prepared for that," Terrazas said.
Almost half of homeowners over 60 showed particular concern about their personal finances given it's led to volatility on Wall Street that's affected the trading prices of investments many rely heavily on, and uncertainties around Social Security reform.
"Both of these sources of income could be drying up, so they're really in a bind when it comes to thinking about how to meet rising costs," Terrazas said. "The last time we had price increases, we also had a rising stock market. That's not happening right now."
Some trying to downsize are particularly concerned about costs around renovating so they can sell.
"The home building and home renovation sector is particularly vulnerable to tariff costs," Terrazas said.
Why tariffs may prompt use of home equity investment platforms
All of this could add some momentum to home-equity investment vehicles like Point's because that the potential financial strain could make more traditional housing-finance firms more cautious about the debt-based second lien lending.
While traditional housing-finance firms have turned increasingly to second-lien lending that allows older borrowers with lower first-mortgage rates to tap equity using debt, they're wary of higher debt-to-income and loan-to-value ratios that indicate increased performance risk.
Home equity investment vehicles enable homeowners to sell equity based on house prices instead. Housing values have fluctuated in some areas but generally still have single-digit appreciation rates.
HEI vehicles have primarily been used for renovation, small business investing and paying off higher interest debt, all of which could become greater needs if homeowners' finances experience increased strain.
While mortgage companies and HEI providers historically have been different businesses, the latter has gained more traction in recent years due to the large runup in home equity from pandemic-era interest rate stimulus and partnerships between the two have grown.
Point, for example,
