Although getting involved in an employee’s home buying process is not the norm for a company, today’s volatile housing market and rising mortgage interest rates are making things especially tough for first time home buyers and current homebuyers planning to relocate in the near future. Are there ways a company can meaningfully support their employees in these situations?
Can companies support their employees in the wake of rising interest rates?
Yes! During difficult economic climates, there are options for companies to support their relocating employees, and the current uptrend in interest rates is no exception.
“This last year, 2022, was unforgettable in terms of the extraordinary rise in mortgage rates,” says Eric Contreras, senior loan officer and relocation specialist with Colonial National Mortgage. “After beginning (the 2022 year) below 3.5%, rates went above 7%, before falling to around 6.5% during the final weeks of the year. Rates are mostly impacted by inflation data. The lower the inflation, the better the rates we will see.”
How can companies help?
Until things start to normalize, there are a few ways companies can support their relocating employee’s home purchase experience:
- Acknowledge the housing challenge needs and the high impact to homeowners and address them in the relocation benefits offering.
- Provide viable options to the employees such as mortgage differentials, rate buy downs, and down payment assistance. Contreras elaborates on all the ways mortgage companies can assist:
“We can offer low down payment options, the ability to close on a loan before a transferee starts a new job, and an express approval process where we can take the file through underwriting without a contract, giving the buyer an upper hand when going against other offers. Mortgage companies offer rate/term refinances and cash out refinances with discounted fees and the ability to roll over their escrow to the new loan.”
- Consider cost of living between origin and destination. If the COLA in the destination is cheaper or dependent on the cost, offer COLA coverage for the first two years in lieu of the mortgage differential.
- Consider converting some policies to Core/Flex versions that are inclusive of viable services that meet the needs of different employees. This will prevent you from having to continually adjust policies to account for market changes.
What does it take to get this process going?
For more information about how you can update your program to provide the best home purchase assistance to your employees, Contact CRI.
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