Helping Employees Leverage Upcoming Interest Rate Reductions
Interest rates have the single biggest impact on home affordability in the US, directly impacting the amount owed on a monthly mortgage payment. For employees who are looking to become first-time home buyers or current homeowners looking to upgrade, the lack of favorable interest rates has made this goal financially unfeasible for many since 2020. The Federal Reserve has held rates at a 23-year high for more than year and are finally ready to begin interest rate cuts.
Our homeownership assistance benefit is designed to optimize for these financial savings opportunities in upcoming interest rate reductions to provide employees with the best possible interest rates from the time of purchase through their first 18-months of ownership.
Key Attributes of Our Homeownership Assistance Benefit
Optimized Interest Rates: Within an 18-month period post-purchase, employees can exchange their initial interest rate for a lower rate at no out-of-pocket cost. This feature ensures that they can take advantage of future rate reductions, improving their financial situation over time while owning their home.
Substantial Savings Opportunities: A single percentage point change in mortgage rates can lead to significant savings. For example, the median-priced home in the US according to the National Association of Realtors is $422,600. An employee purchasing a property at this price point on a 30-year fixed mortgage at 7%, could exchange their initial rate for a future rate available at 6%, and in doing so save over $2,600 annually on interest payments.
Cost-Free Refinancing: Employees are eligible to refinance at no cost when their initial interest rate drops by at least 0.25%. Lenders often recommend waiting for a full percentage point decrease due to the costs associated in refinancing a loan. But employees who use our benefit can rethink this mindset knowing they are able to select a lower available rate without incurring any expense to do so.
Proactive Interest Rate Monitoring: We track each employee’s mortgage rate and notify them when a lower rate becomes available. By leveraging the CME Fed Watch tool, we can forecast potential interest rate changes, helping employees make informed decisions about when to refinance and the expected number of opportunities to do so over their 18-month refinance window.
Why This Benefit is Valuable for Employers
Enhances Employee Financial Well-being: By integrating our homeownership assistance benefit into your employee benefits package, you provide a valuable tool that can significantly improve employees' future financial wealth through homeownership.
Attracts and Retains Talent: Offering our benefit can differentiate your organization from others in your market, making it an attractive option for both potential hires and current employees by encouraging them to make a long term commitment to you and your community.
Strengthens Employer-Employee Relationships: Demonstrating care for employees’ financial well-being fosters loyalty and satisfaction, contributing to a positive workplace culture.
Looking Ahead to 2025
The anticipation of multiple interest rate cuts is going to impact the housing market for sellers and buyers next year. By incorporating our homeownership assistance benefit into your benefits package, you offer a valuable resource that enhances employees' financial well-being and supports their homeownership goals. This strategic benefit aligns with both employee interests and organizational objectives, ensuring a win-win for your workforce and your company.
