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As interests rates heat up its cooling effect on Phoenix real estate chills mortgage refinance activity

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An overview shot of the Phoenix metropolitan area showcasing different levels of commercial, single-family and multifamily housing here in the Valley of the Sun. (File Photos/

Phoenix metropolitan sees shift in real estate financial benchmarks

By Terrance Thornton | Digital Free Press

As the American financial sector adjusts data points, loan percentages and the bottom line accordingly due to an upward tick in interest rates, one Arizona real estate expert is pointing out a distinctive change in consumer options.

“Organic mortgage refinancing is virtually nonexistent,” said Frank Aazami at Russ Lyon Sotheby’s International Realty. “It is an easy decision — businesses and your everyday consumers — are looking to refinance every two or three years; people are looking for ways to save a little money.”

On June 15, the Federal Reserve made the decision to raise interest rates by 0.75% — which experts say is an attempt to stave off more negative inflation rates lowering the value of the American dollar.

But for Mr. Aazami, the change in federal interest rates is having a cooling effect on the financial sector of real estate markets.

Frank Aazami

“There are many hooks to get people to refinance,” he said of things like equity cash outs or lower monthly payments. “Talking to mortgage bankers now no one is going to want to do that. Purchases will be more difficult because the payments are higher. The rates went up so fast and the impacts of have been so swift.”

At JPMorgan Chase is Patricia Maguire-Feltch, national field executive at Chase Home Lending, who agrees the rapid change in rates is having an impact on the options for American consumers who own property.

Rising rates do impact consumers when buying new homes and in refinancing their current homes,” she told the Arizona Digital Free Press. “However, it’s important for consumers to understand that while rates are rising, they’re still historically low.”

Ms. Maguire-Feltch reports as financial terms are shifting because of interest rates due diligence is the first step for consumers.

“If a consumer is interested in purchasing a home, I recommend working with a loan officer to ensure they can understand what they qualify for and to remain in touch, as rates are changing daily,” she said.

Mr. Aazami reports the allure of cash-only buys is a thing of the past due to how supply and demand has played out over the last few years.

“Let’s look at what took place in the last 24 months: The frenzy was here to invest and buy homes, everyone could afford it and the entire world was selling — not just our market,” he said. “But then supply shrunk. Here in our market for $5 to $7 million you would get a genuinely nice home, but those were gobbled up in my space. No one is getting you a better price. It is the market, determined by supply and demand — it was already happening.”


Mr. Aazami says from his view there are two options: You go up to the next economic tier, or you go down.

“When that segment dries up you go to the next tier up or the next tier down,” he said of the various levels of the luxury real estate game. “But the next step up is way up. It is a push up and everything must also rise. If any of the appliances or fixtures are in a catalogue, it does not belong in a $15 million house.”

Mr. Aazami says in the luxury real estate level of the Phoenix metropolitan area “creativity and customization” is the name of the game.

“We are all tired of the same old, same old. If you are giving me more in style or quality, then I may spend those dollars. Are you giving me better quality, is the masonry top-tier? Are there steel overhangs, better insulation?” he said of the level of consumer expectations.

“I am optimistic; however, I think the entire region was undersold and that is where we still see activity blooming and where we will see value.”

Ms. Maguire-Feltch also reminds interest rates are still at historic lows.

“Mortgage refinance options continue to be available, including cash out options which allow you to use the equity in your home for a variety of needs like home improvement, college expenses and other life events” she said. “Homeowners planning to refinance should work with a home lending advisor to understand what options are best for them. They can also use tools like a refinance calculator to assess the costs associated with refinancing: how much they can afford and how much they may be able to save by refinancing.”

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