Fed Rate Cuts & Global Mobility: Real Estate and Housing Market Opportunities (Part 1 of 2)

The Federal Reserve's decision to cut interest rates by 25 basis points last week, lowering the federal funds rate to 4.00-4.25%, represents the first rate reduction since December 2024. For global mobility professionals managing corporate employee relocations and international assignments, this development creates both opportunities and challenges across multiple program dimensions. Over a two-post series, we will consider the implications for the following:

1. Real estate and housing markets
2. Impact on mobility costs - Exchange rates and budgets 

So, let's get into the first of our series that focuses on the impact on housing markets.

Domestic US Relocation Benefits

Current Market Conditions: As of late September 2025, the average 30-year fixed mortgage rate sits around 6.26%-6.37% - its lowest level in nearly a year. This creates a more active housing market with increased buyer activity, benefiting  home sellers. 

Market Activity Surge: "We have seen significantly increased activity and many multiple offers being made, which is driving prices up again due to the increased buyer activity and improved affordability with these lower rates," notes Drew Lightowler, President of Plus Relocation Mortgage. "The improved financing conditions are bringing buyers back into the market who were previously priced out, creating more competitive bidding situations for quality properties."

National Association of REALTORS® economists say a 30-year fixed rate mortgage of 6% would make the median-priced home affordable for about 5.5 million more households—including 1.6 million renters. If rates were to hit that magic number, it’s likely that about 10%—or 550,000—of those additional households would buy a home over the next 12 or 18 months, according to new data from NAR.

Corporate Program Advantages: For domestic transferees with corporate home sale assistance through Buyer Value Options (BVO) or Amended Value Options (AVO) programs, the improved market conditions provide additional strategic value. While all sellers benefit from more qualified buyers, employees with guaranteed sale programs can leverage timing flexibility: they can accept their relocation knowing their home sale is guaranteed, while potentially benefiting from better market conditions if their home sells above the guaranteed price.

Realistic Rate Projections: While forecasts suggest rates will continue decreasing gradually to potentially settle in the 6.0-6.2% range by year-end, economists don't expect the average rate to drop below 6% this year. Housing authorities project a potential average of 6.5% for the full year.

The Reality Check: Remember, mortgage rates didn't keep falling last year, even as the Fed cut its main rate two more times. Instead, mortgage rates rose and kept climbing until the average rate on a 30-year home loan reached just over 7% by mid-January. This pattern reminds us that Fed rate cuts don't guarantee continued mortgage rate declines. It is not a direct relationship.

For more insights on what the experts have to say about the rate cuts on the housing market, try these:

• Trump said housing will "soar" after rate cuts. Here's what the experts have to say
• What the Fed’s Rate Cutting Plans Mean for the Housing Market
• How the Fed’s rate cut impacts your mortgage rates

Key Strategic Opportunities

Mixed Impact on Participation: The current rate environment creates competing forces affecting employee willingness to relocate. While improved market activity and buyer confidence may encourage some employees to consider relocation, those with very low existing mortgage rates (3-4%) may still be reluctant to give up their favorable financing. Organizations should prepare for potential volatility - inflation heated up in August and if the September inflation report shows another bump in consumer prices, it's possible we could see rates rise.

Market Context: Home prices, while rising more slowly than in years past, are still up by roughly 50% nationally since the start of this decade. This means even with lower rates, affordability remains challenging for many employees.

Refinancing Opportunity: Many homeowners looking to refinance have already seized on the decline in rates, sending applications for refinance loans sharply higher in recent weeks. This creates opportunities for employees with existing homes to improve their financial position before relocating.

Why Recruiters Should Pay Attention

Candidate Qualification Reality: Many top candidates with low-rate mortgages (3-4%) are essentially "mortgage-trapped" - they may interview but ultimately decline offers requiring relocation due to the financial impact of losing favorable rates. Understanding current mortgage rate trends (6.26-6.37%) can help recruiters set realistic expectations about which candidates are truly viable for and open to positions that would require relocation.

Negotiation Leverage: Knowledge of corporate relocation benefits like Buyer Value Options (BVO) and Amended Value Options (AVO) programs gives recruiters concrete talking points to address candidate concerns about home sales and purchases. The current market activity surge creates opportunities to reassure candidates that their homes are more likely to sell quickly with multiple offers driving competitive situations.

Strategic Timing: This improved market environment creates a "window of opportunity" where candidates may be more receptive to relocation discussions, allowing recruiters to position moves as advantageous timing rather than just another job change.

Planning Considerations

BVO/AVO Program Considerations: Lower interest mortgage rates create a more active housing market with increased buyer activity, which can benefit employees using corporate home sale programs like BVO and AVO. When there are more qualified buyers in the market due to improved financing conditions, homes typically sell faster and potentially at better prices - reducing the financial risk these guaranteed sale programs pose to employers.

However, timing is crucial - the improved market conditions may also mean organizations need to be prepared for increased program costs if more employees become willing to relocate when they feel confident about selling their current homes.

Rental Market Benefits: Lower interest rates may help stabilize rental costs as borrowing becomes cheaper for developers and property owners, creating opportunities for corporate housing arrangements.

Important Caveat: While lower rates will bring some buyers and sellers into the market, today's cut will not be enough to break up the housing market logjam. While a significant lack of housing supply is widely considered the biggest issue driving the housing affordability crisis in the U.S., many other factors like zoning laws, underbuilding since the Great Recession, high building costs, and a mismatch between available housing types and demand (e.g., too few starter homes) are also contributing to the problem. Further drops in mortgage rates and much slower home price growth are needed to make a significant dent in affordability.

Coming Next: In Part 2, we'll consider the possible impact of the Fed rate cuts on global mobility budgets with a focus on the impact to exchange rates and global relocation and assignment costs.