Three Things We’re Hearing
- The Home Equity paradox!
- Cash Back card surge
- Direct mail still dominant
A four-minute read
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The Home Equity Paradox: Record Wealth, Shrinking Lending
- Since the 2008–09 financial crisis, U.S. homeowners have built unprecedented housing wealth
- Total home equity has more than tripled, rising from ~$10 trillion in 2012 to $34.5 trillion in 2025
- In 2000, average household equity was about 125% of median income and by 2025, it’s nearly 300%
- But while equity has surged, home equity lending has not as outstanding balances have hovered near $300 billion, down ~40% from mid-2000s levels
- Why the Disconnect?
- Regulation – post-crisis reforms (Dodd-Frank, Basel III) made second-lien lending more expensive and capital-intensive
- Shifting Borrower Behavior – in the 2010s, ultra-low mortgage rates led many to refinance and cash out equity rather than open a HELOC
- Operational Retreat – major lenders like Wells Fargo and Chase pulled back from home equity, and today, Discover, Citizens, and a few fintechs dominate a quiet market
- Interest Rate Volatility – Since 2022, rising rates made HELOCs more expensive; and despite rate spread compression between HELOCs and personal loans, HELOCs remain ~300bp cheaper than personal loans and have much higher line sizes
- Meanwhile, consumer demand is coming back — despite the pullback in home equity loan originations, demand is rising — search volume, online applications, and consumer survey data all show growing interest
- Home Equity marketing is up 90%+ YTD; however, prior to that, home equity marketing was down, especially in the dominant direct mail channel
- Creative quality has been flat with few lenders showing consumers why home equity borrowing is cheaper than other options
- Despite the spike in 2025 marketing, home equity lending is at historically low levels, leaving a big opportunity for lenders!!!
- Average tappable equity per household now exceeds $245,000
- For borrowers locked into 3% mortgages, a HELOC is often the best path to liquidity
- Citizens and fintechs like Figure are responding with digital offers, yet most banks have left the field wide open
- There is $10–$12 trillion in tappable equity in U.S. homes, yet banks are lending as if it’s 2011 – with credit card APRs topping 20%, the case for smart home equity lending has never been stronger
Cash Back Card Surge
- Cash back has been the predominant credit card rewards type in recent years, accounting for roughly half of all card mailings
- Discover and Capital One (now the same company) have been the dominant mailers of cash back offers in the past 12 months, followed by Bank of America and Citi
- Typical features of cash back cards include sign on bonuses, 0% APR, and no annual fee
- What determines the “best card” might depend on an individual’s spending patterns
- Best for ultra-simple rewards: Citi Double Cash and Wells Fargo Active Cash offer flat-rate cash back on all purchases with minimal hassle
- Category boosters: Chase Freedom Unlimited adds extra returns on travel, dining, and drugstores
- Big grocery earners: Blue Cash Preferred shines with 6% at U.S. supermarkets (capped), ideal for families
- Consumers have shown a preference for cash back cards, with many of them preferring their primary bank as issuer
- Google trends show consumer interest in cash back cards has nearly doubled since 2018
- Given consumer interest in cash back, along with their preference for dealing with their primary bank, regional banks are well positioned to grow their card portfolios with a competitive cash back product
Direct Mail Still Dominant
- As noted above, YTD 2025, Home Equity marketing has shown the largest resurgence of the consumer finance products that we track
- Across all financial products, most large marketers use direct mail as their primary new customer acquisition channel
- Personal loan relies most heavily on mail
- While national television is used by some banking product marketers to augment other channels
- Amex Platinum refresh: American Express plans its “largest investment ever” in revamping both personal and business Platinum Cards in fall 2025 — including redesigned physical cards, expanded Centurion lounge access (adding Newark, Salt Lake City, Tokyo), enhanced dining perks, and likely higher annual fees
- Chase Sapphire Reserve overhaul: Effective June 23, 2025, annual fee rises from $550 to $795 with benefits including new 8× travel and 4× flight/hotel earn rates, Points Boost redemption (up to 2¢/pt), richer lifestyle credits, sleeker design — and a business version launch
- A survey of Gen Z consumers (those born between the mid-90s and early 2010s) reveals that rewards or discounts as well as higher credit limits are the dominant reasons for them to choose a credit card
Thank you for reading.
Jim Stewart
www.epicresearch.net
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