January 29, 2021

Contributing writer

Mortgage rates and property: What Arizonans need to know

As an Arizonan, it’s important for you to understand your property and mortgage rates so you can save money and prepare your budget. Recently, most mortgage and property prices have gone down significantly and will likely only rise during the pandemic, so if you’re thinking of getting a house, the perfect time is now. Let’s see what Arizonans can expect to pay in 2021.

What is the Current Arizonan Rate as of 2021?

The most common mortgage term is 30-years but, 5, 10, 15, 20, and 25 years are applicable. If you choose to opt for a 30-year fixed-rate term, your set mortgage rate is 3.87%, while a 15-year fixed rate is 3.54%. For homeowners that want to spend less on interest, always choose a 15-year fixed rate, although that may not be accessible to all purchasers.

Since mortgage rates change daily, it’s better for you to compare rates that the time of purchase rather than weeks before because you may pay more than you expect. You’ll also see a more expensive mortgage rate depending on the season, the neighborhood’s popularity, but a poor credit rating or a new bank may make your interest rate twice as high.

Do Mortgages Vary Significantly in the Grand Canyon State?

Besides the constant change based on the day, there are also other aspects at play that are specific to the bank you lend from. For example, Compass Bank seems to have the most expensive rate in the state, whereas TCF Bank has consistently low interest over time. Choosing the wrong bank could make you save or spend thousands of dollars.

According to Value Penguin, a property worth $240,000 could cost you $61,145 more in interest rate if you choose to go with Compass Bank over TCF Bank. That’s more than the average yearly salary of all United States workers. It’s vital to use patience when looking at various mortgage rates and obtain at least three separate quotes from the same bank.

Have Loan Rates Risen in Arizona in 5 Years?

Mortgage rates in Arizona have remained consistent over the last 5 years, but there was a slight spike in the average 3-year mortgage rate in 2018. You can expect to pay around 4% interest regardless of year. However, the effective federal funds rate has increased to 2.50%, which is significantly higher than in past years, which implies more people are taking out loans.

Stabilizing rates, even during the COVID-19 era of the economy, is a great sign. It’s likely that rates will go down in the next few months, which is favorable for new homebuyers, but bad news for anyone trying to sell. It’s in a current homebuyer’s best interest to hold off on selling until at least 2022, so you have a better chance of getting your money’s worth.

What Arizona City is the Most Expensive?

Property and mortgage rates can vary depending on your city, but they don’t differ too significantly in a way that most homeowners won’t be able to afford. The Phoenix area has an average rate of 4.58% and an average home value of $238,173. Therefore, you can expect to pay $974.51 per month on your mortgage.

While it’s expected that Phoenix would be the most expensive area, that title belongs to Flagstaff, which has an average mortgage rate of 4.70%, and an average home price of $254,659 and will cost you $1,056.61 per month. Lake Havasu City is the cheapest area, while Tucson and Sierra Vista have a similar average mortgage rate.