Pioneer Bank Funds First Mortgage Rate Relief Loan
last updated on Monday, July 15, 2024 in Community News
Two Percent Interest Rate Reduction Creates New Pathway for Homeownership in Mankato, Minnesota.
It didn’t take long for homeowner Ethan Rademacher to realize that mortgage rates were steadily moving up during his home search. The higher the rates went, the less comfortable he was with the mortgage payments he’d be making on his first home. He found a home that he loved and locked in his rate knowing the home improvements he wanted to make would have to wait.
In May of 2024, FHLB Des Moines introduced a new product, Mortgage Rate Relief, to its members which is designed to make homeownership more affordable by reducing eligible homebuyers’ rates by two percent lower than the current market rate. The product serves those whose income falls at or below 80 percent of the Federal Housing Finance Agency’s (FHFA) Underserved Areas Data.
The Mortgage Rate Relief went live on May 6 and by May 10, Pioneer Bank located in Mankato, Minnesota had locked in and funded the very first loan. “When I first learned about this product, I instantly thought, ‘I have the perfect customer for this,’” stated Loan Officer Carissa Lutterman.
That customer was Rademacher, who was able to reduce his mortgage rate by two percent, which in his case, saved him $250 on his payment each month. “Not only am I able to pay less each month now, I don’t have to wait on making updates to my house. I’m able to afford to put a fence in right away for my dog, which I know will definitely make him happy.”
While Rademacher was the first customer to receive the interest rate reduction, Pioneer Bank knows the Mortgage Rate Relief will make a tremendous impact for many others in their market looking to be homeowners. Lutterman went on to say, “Prices are about five percent higher than they were last year at this time. This interest rate reduction product will also provide an affordable path for those who are looking to downsize. This will allow more inventory for first-time homebuyers. So, this has really created a full circle for homeownership.”
The grant program, which provides $25 million in funds, is available to all Participating Financial Institutions within the Mortgage Partnership Finance® (MPF®) Program. Funds are available on a first-come, first-served basis. FHLB Des Moines Mortgage Program Director Dan Mahlum commented, “We have seen a tremendous amount of activity of this product. As of early July, we’ve reached 50 percent of available funding. It’s great to be a part of a program that enables communities, like Mankato, to be a vibrant place to live and work.”
When asked about the significance of creating affordable homeownership for his community, CEO of Pioneer Bank David Krause stated, “Housing is so important, and that starts with this bank. I think our participation with Federal Home Loan Bank of Des Moines and offering the Mortgage Rate Relief shows we're making the industry strong. By using this product, we're making our community stronger."