The “trapping” stems primarily from two key issues — “persistently high interest rates and the normalization of non-traditional career paths,” the company explained.
About 9% of homeowners with a mortgage experience either a job loss, a reduction in pay or a transition to self-employment within a given year, the analysis found. In turn, these events can lower credit scores and restrict access to traditional methods of home equity tapping, such as a home equity loan or a home equity line of credit (HELOC).
“Homeowners facing a negative credit shock collectively hold an estimated $731 billion in home equity that they may be unable to access due to credit constraints,” the analysis stated. Additionally, persistently high interest rates “significantly increase the cost of borrowing against home equity, making traditional options like cash-out refinancing less viable.”
The shift to “jungle gym” career transitions — such as “frequent job transitions, gig work, and self-employment” — has led to a stark increase in overall financial volatility. This exacerbates existing barriers to credit and access to home equity.
“Millions of homeowners are facing a financial paradox: they’ve built up significant home equity but are unable to access it precisely when they need it most,” said Aaron Terrazas, an economist with Point.
“With traditional home equity lending increasingly out of reach for many Americans, the industry is just starting to adapt to these new economic realities and develop innovative ways to provide homeowners with the financial flexibility they need precisely when they need it.”
Underscoring this statement are recent bouts of economic volatility stemming from government actions such as tariffs and mass layoffs of federal workers, the report explained. The data was sourced from the Federal Reserve and the U.S. Census Bureau.