See Mortgage Rate Quotes for Your Home
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The average rate for a 30-year fixed rate home loan in Arizona is currently 3.87%. The average 15-year fixed rate mortgage is at 3.54%, while 5/1 adjustable-rate mortgages average at 3.86%.
|Loan type||Average Rate||Weekly Change||3-Month Change|
|Loan type||Average Rate||Weekly Change|
Mortgage rates change every day, which is why it's critical to compare rates when you're deciding to buy or refinance your home. We've provided more analysis and information below on how home loan rates in Arizona are changing over time, across different lenders and depending on where you live.
How Much Do Arizona Mortgage Rates Vary?
In addition to tracking the change in average rates by type of loan, we also looked at the range of rates posted by lenders in the Grand Canyon State.
We found that there was a difference of 150 basis points between the lowest and highest mortgage rates reported among Arizona lenders for a 30-year loan. TCF Bank had a rate of 3.25%, while the most expensive quotes carried a rate of 4.38%. To illustrate what this range means for a borrower, consider the difference in monthly mortgage costs between two home loans at these minimum and maximum rates.
For a typical property in Phoenix worth $240,000, the difference between Arizona's highest and lowest mortgage rate translates to a difference of $61,145 in interest expenses over 30 years. In terms of monthly cost, the amortized payment for loans at these rates would differ by nearly $170. This shows how much money it's possible to save by taking the time to look for the best possible mortgage offer. Try comparing your own rate quotes using the tool above—we typically recommend you obtain at least three separate quotes to give yourself more options and negotiating power.
Comparing Home Loan Rates by Bank
We also took a look at some of the major lenders in the Grand Canyon State to highlight what rates individual institutions are offering at the moment. This chart compares a few of the biggest banks operating in Arizona to the industry average and lowest rate.
When translated into dollar amounts, the differences in rate between the lowest and highest mortgage rate at Arizona's largest banks is significant. Based on the given home price of $200,000 and down payment of 20%, a mortgage from Compass Bank would currently cost $847 per month in principal and interest compared to TCF Bank, where the same costs totaled $730. Over 30 years, this amounts to a difference of over $42,000 in paid interest.
Are Home Loan Rates Rising in Arizona?
For 2019, mortgage rates in Arizona and across the country may not rise as much as previous forecasts. The Federal Reserve's Open Market Committee (FOMC) recently announced that it would "be patient" and instead adopt a data-dependent approach, prior to continuing with future rate hikes.
This diverges significantly from market expectations at the end of 2018, when the market widely expected the FOMC to hike rates 2-3 times in 2019. Currently set at a range of 2.25%-2.50%, the target federal funds rate represents the cost that banks pay to borrow money for their operations. Due to the impact of federal funds rate on the interest rates of consumer loans and deposit accounts, the FOMC's periodic announcements are regarded as indicators of future rate trends.
For homebuyers in Arizona, the news of stabilizing rates creates some breathing room for prospective shoppers. People often rush to secure financing in a rising rate environment, before loan costs get too high. With the FOMC announcing its intent to monitor the market before continuing with rate hikes, buyers can take comfort in knowing that mortgage rates won't explode while they're shopping for the right property and lender.
Comparing Home Loan Rates in Arizona's Cities
Finally, we looked at how mortgage rates can vary among different cities in Arizona. For instance, we found that typical interest rates differ only slightly based on whether you apply for a home loan in Phoenix as opposed to Tucson. If you're thinking about moving to another city in-state, the table below shows you the typical mortgage rates and home values in Arizona's largest metro areas.
|MSA||Average Mortgage Rate||Median Home Value||Estimated Monthly Cost|
|Lake Havasu City-Kingman||4.64%||$147,875||$609.29|
As the table shows, mortgage rates tend to be fairly consistent wherever you choose to buy a home in Arizona. If your quoted rates are too similar to choose between, another way to find the affordable solution is by evaluating which of the available loan types work best for you. Consider the example of Phoenix, the state's busiest metro area and largest real estate market.
Evaluating Mortgage Options: an Example in Phoenix
Let's say you're planning to buy a property in Phoenix at the median price of roughly $240,000. In such a situation, you have several options. A typical 30-year mortgage with a 20% down payment would cost you $982 per month before taxes and insurance, and $161,514 in lifetime interest. While this works in most situations, homeowners who want to avoid such high amounts of interest or reduce their monthly costs have other mortgage options.
Opting for a shorter loan term is the most direct way to reduce lifetime interest. Compared to the 4.58% average for a 30-year mortgage in Phoenix, the typical 15-year mortgage rate stands at 4.11%. With a lower rate and much shorter repayment term, the 15-year option would reduce your lifetime mortgage interest by nearly $96,000 on our median Phoenix property. However, compressing the repayment schedule into half as many years also increases monthly costs by nearly one-third.
To reduce both the interest rate and the monthly payment, you might consider an adjustable-rate mortgage (ARM) instead. The initial fixed rate on 5/1 ARM loans averages at 4.01% in Phoenix, which gives us monthly principal and interest of $918 and interest costs of $36,752 over the first five years. This is less than the five-year cost of $42,154 with the standard 30-year mortgage, and $64 less per month.
However, ARM loans only guarantee a fixed rate for that initial period. After the first five years of a 5/1 ARM, it's possible for your rate to rise depending on how market rates behave. This makes ARM loans a better option if you plan to move out early on, but potentially costly if you want to stay in your home beyond the fixed-rate period.
If you have extra cash, a final way to reduce long-term costs is by buying discount points upfront. Paying for points allows you to reduce your quoted mortgage rate. Returning to our example in Phoenix, let's say a lender sells discount points of one-quarter percent at a price tag of 1% of your total loan. Given the median home value of $240,000, this means you'd pay $2,400 at closing to lower your 30-year rate from 4.58% to 4.32%—a lifetime savings of $10,647.
Finding the right balance between upfront costs and long-term interest depends on your individual situation. This makes it highly useful to plan ahead on issues like how long you'll stay in your home and whether you want to build equity quickly or save room in your monthly budget for other expenses.