The Trump administration’s wave of levies could hit borrowers hard
While the Trump administration paused or reduced some tariffs last week, charges on steel, aluminum, automobiles, and auto parts are affecting mortgage customers in parts of the United States.
For mortgage brokers in places like Detroit, home to a large portion of US automobile manufacturers, continued tariffs could impact the market heavily.
Chris Sbonek (pictured top), president and CEO of Mitten Mortgage Lending in the Detroit suburb of Wyandotte, is concerned about the future effects of ongoing auto tariffs on his customers.
“When I’m thinking about the average person who calls in to qualify, the biggest effect I think we’re going to see from tariffs is going to be the fact that people are going to lose jobs,” Sbonek told Mortgage Professional America. “You have people who are shopping, who are preapproved now, and then they’re out of a job.”
Sbonek noted that brokers will need to ensure that the incomes of the customers they are actively working with have not drastically changed.
“Everyone is going to have to call their borrowers and make sure,” Sbonek said. “Make sure they’re still employed. Make sure their employment hasn’t changed, or they haven’t had to take a pay cut. That right now is the biggest issue in front of us.”
Brokers will have to be creative
Sbonek notes that brokers have an advantage in that they can help customers with creative financing options. He feels that brokers will have to get creative if the tariffs remain long-term.
“In six months to a year, what am I forecasting?” Sbonek said. “We have a lot of creativity as a broker. There are a lot of different things we can do. We have a lot of different lenders, and they all have different programs. For one-income homes, or people working part-time, we might have a solution for them.”
Amid global market instability, Christopher Holmes of Scottsdale Mortgage Advisors remains optimistic, drawing on past crises to guide clients.https://t.co/Txiw7ps0bG
— Mortgage Professional America Magazine (@MPAMagazineUS) April 9, 2025
Another creative solution for brokers will be to help customers use the equity built into their homes to cut down on high-interest debt, which will also improve debt-to-income calculations, according to Sbonek.
“Credit card debt is as high as ever,” Sbonek said. “Equity is also at one of its highest points. People have more equity in their homes than ever before. If people do start struggling financially with these tariffs, I see people tapping into their equity and paying off some high-interest credit cards to free up some debt.”
Sbonek said in the event of a forecasted decline in rates, customers might be able to cash out the equity in their home without raising mortgage payments.
“There are other benefits to refinancing,” Sbonek said. “For some people, skipping a payment or two, keeping their monthly payment the same, getting maybe $20,000 or $30,000 cash out might help them tremendously financially.”
Property taxes causing more strain than tariffs
While Sbonek doesn’t know exactly how tariffs will impact his customers, he does know that property taxes are causing a major strain on homeowners.
“I still think the biggest thing that’s impacting people’s affordability where we’re at is property taxes,” Sbonek said. “At least at this point in time, it’s a way bigger issue than the tariffs, because people are moving into houses and paying pretty insane property taxes. And that’s more crushing to a lot of people’s affordability for buying a house than anything else right now.”
Some of the increased property equity is due to higher property values during the pandemic. But that also means property taxes are higher, Sbonek noted.
“Property taxes are the longest lingering effect of the pandemic,” Sbonek said. “Rates were going to go back up. But it’s the price of the house, and if you can get by the price of the house, it’s those property taxes. Now that all that extra money, all that stimulus that people were getting, is gone, we’re left with these permanent effects, which are property taxes.
“Might they go down if property values take a little dip? Sure. But are they ever going back? No, never. They’re never going back to where they were. They’re going to be higher forever now.”
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
