Employee Relocation in a Rising Interest Rate Environment: How Macroeconomics Affects the Decision

Macroeconomics affects us in ways we often don’t realize, from the money we earn to the prices we pay for goods and services to the stability of our jobs. A significant macroeconomic event occurred recently, which has major implications for both consumers and businesses alike: the interest rate was raised by the Federal Reserve.

While this may seem like just a minor change, it’s sparking significant changes across America’s labor market as companies rethink how they hire and employees rethink how they find new jobs.



Why Professionals Are Less Likely To Relocate Today


The professional world has changed dramatically over the last few years. One of the significant changes is that professionals are less likely to relocate today than they were before. The reason for this is that rates on interest-bearing products are rising. This makes it more challenging to use debt to finance a move if your current home or property isn’t worth enough.


Rising Interest Rates and What They Mean for Homeowners


In recent years, interest rates have steadily increased. The most recent hikes in 2022 make rates twice as high as they were at the start of 2022. Homeowners can feel the squeeze as debt payments rise and home values drop. 

  • A homeowner with a $500,000 mortgage at 3% over 30 years will have a monthly payment of around $2,100 per month. 
  • With that same mortgage at 6.35%, they’ll see their monthly payment increase to around $3,100 per month.

Is There a Talent Shortage?


The most common types of shortages are work shortages and skills shortages.

  • A worker shortage occurs when more people are needed to fill a job opening.
  • A skill shortage occurs when qualified people are not hired because more specific skills are required for an open position.

In our case, we’ll talk about the worker shortage and how it impacts talent acquisition in the professional world. With rising interest rates and more people experiencing higher debt burdens, many professionals have been unable to switch jobs or even change career paths because they can’t afford to relocate and buy a home at significantly higher interest rates.


When you have a 750k mortgage locked in at 1% interest, the concept of moving across the country to take a new job in a place where you will have to purchase a $350k home at 6.35% is not going to be attractive.


Is This Cyclical or Structural?


Mobility is a term that refers to the ability of an individual to move from one place to another. The U.S. has seen a dramatic change in mobility since the 2008 recession.


There are two schools of thought on how this mobility change impacts professional relationships. 


  1. One school believes that this change is temporary and will eventually go back to pre-2008 levels. 
  2. The other school holds that this change is structural and interest rates will remain at these levels indefinitely.

What Will Happen if Interest Rates Continue to Rise?


If interest rates continue to rise, individuals will be less likely to take on large debts. The repayments for these loans will be more expensive.

As a result, businesses will find themselves with a smaller pool of candidates who can afford to make this type of commitment. Ultimately, if interest rates keep rising, there may come a time when companies are exclusively hiring executives to do remote work.

What Can We Do About It Now?

Mobility is a massive part of the professional world, yet as interest rates rise, it can be difficult for professionals to afford relocation. As an executive, you can update your relocation policies to assist new employees with mobility.

In this way, you give employees tools to help them feel more at home and less stressed about their move. Here are some solutions you can add to your policy:

1) Help Them Prioritize Their Needs

You have the opportunity to make a difference for your new hires by easing their transition into their new home. The last thing you want is for them to drive an hour each way every day so they can get their kids to school or soccer practice. The home they choose must be able to accommodate the needs of their family and provide a sense of comfort and familiarity during this time of transition.

2) Purchase Some of Their Points

You must arrange for them to move and settle before they start work. One way to do this is by purchasing some of their points for their current mortgage. 1 point = 0.25% of the interest rate. For example, you could offer to pay for 4 points over the time of their employment, effectively taking their interest rate down by 1%.

This can help make the process less stressful because you won’t have to worry about whether or not they will be able to handle increased interest rates when their mortgage comes up for renewal. It also helps retain talent because new employees are more likely to stay if they feel they’re making progress on their home ownership goals while still employed with your company.

3) Subsidize With Mortgage Assistance

You can set a dollar amount toward home purchase with which you will be helping the employee. Every mortgage will have a different price, so it could be costly to play the percentage game. 

You can also subsidize with a percentage of their annual mortgage payments. You might pay 35% of the mortgage payment amount the first year, then assist with 25% the following year and taper it down until it reaches 0%. That way, you can factor in a solid number into your company’s bottom line and not have to shell out the total amount of assistance at one time.

4) Mortgage Interest Deferral Assistance (MIDA)

MIDA will help pay the difference between old and new interest rates, but eligibility requirements vary from state to state. If your business has employees relocating to a higher interest-rate environment, they may be eligible for assistance with MIDA. The process is not complex and can help ease the pain of employee relocation.

5) Contact Ghost Mountain To Help Streamline the Process

Rising interest rates can be difficult for both employees and employers. Ghost Mountain can help your executive search by easing the pain of employee relocation. Talk to us about your staffing needs or speak to us to discuss any issues confidentially. 

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