By Debbie Bolla
In today’s challenging market, HR leaders are often tasked with the challenge of curbing employee reluctance to relocate. In the U.S., high interest rates on mortgages and low housing inventory are presenting obstacles to mobility leaders.
“Housing affordability continues to be a challenge in the U.S., driven by high interest rates and rising home values stemming from limited supply,” explains Dawn Graffis, senior director, consulting and advisory services, Cornerstone Relocation Group. “These conditions can contribute to employees’ reluctance to relocate.”
“Currently, many people are equity-rich and locked into very low interest rates, making relocation less appealing,” adds Hrvoje Crnecki, VP of business solutions at CRI.
Some organizations are turning to unique benefit options to address these market conditions. These approaches, which can be temporary, help offset some of the costs and potential unexpected losses associated with relocating.
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Discount points. Graffis says some organizations can consider offering a discount point (1% of loan amount) as part of a new home purchase benefit to decrease the total interest rate. She recommends offering the number of points based on a sliding scale following current interest rates.
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Mortgage interest differential allowance (MIDA). A MIDA is a cash payment tied directly to the difference in the employee’s former and new interest rate, explains Graffis. In order toTo offer this benefit, organizations should determine what the minimum interest rate increase will be to qualify, she says, giving more than a 2% difference in interest rate as an example. It is common to pay this monthly for between two and three years.
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Temporary buydown. “As interest rates have climbed, so has the return of mortgage rate buydown programs. This benefit has come and gone with mortgage trends, so we were not surprised to see their return,” says Paige Holden, president of XONEX Relocation. These programs reduce the interest rate and overall mortgage payment for a few years. Graffis notes that the transferee must be eligible for the higher note rate and must agree to the who the company selects as the lender.
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Home finding assistance. “Providing a specialist who can assist with market insights, trends, and forecasts can empower the transferee to make informed decisions in a competitive market,” says Sam Hoey, SVP of account management for Global Mobility Solutions. Real estate agents who are familiar with the local market often provide suitable housing more effectively and efficiently, she says.
In addition, Crnecki says some organizations are offering enhanced packages for home sale and purchase. Mark Woelfel, SVP, global client services for CapRelo, says he is seeing homeowners opting to retain their homes in their original locations and renting where the mobility opportunity is. “For an HR mobility leader, this may create a need for different benefits typically offered to a homeowner, and potentially an extension of the relocation duration,” he says.
Hoey says she is also seeing organizations leverage flexible hybrid work options, which help broaden the search area for housing and alleviate some of the pressure driven by low inventory.
Challenges around relocation will always exist but so will solutions. Holden points to the recent NAR settlement and buyer agent commissions. She says some of the new guidelines around buyer agent compensation will make homeownership more challenging, especially for first-time buyers and underserved communities.
“Employees who are already stretched to save for a down payment deposit will be hard pressed to also pay agent commissions,” she explains. “I see an opportunity for companies to include buyer agent commissions as a flex benefit in a core-flex program, even for renters. It would enable them to provide meaningful help to employees who want to experience the American dream of home ownership.”
