Alaska continues to be a haven for investors and families who are based in the economy of energy production and food distribution. 6.75 percent of the people in Alaska are millionaires, a statistic that places the state squarely at number five in the nation in terms of percentage of millionaires to the total population. The bottom line is that despite the cold weather, Alaska is a fast moving commercial state that is full of opportunity. The question is not whether Alaska has opportunity, but rather if you are properly positioned to take advantage of those opportunities.
What are Alaska Mortgage Rates Today?
The trend for mortgage rates in Alaska over the past few months has been negative. This is a slight change and may not be statistically significant in terms of reasoning behind the fall. However, it is significant enough to note because of the relatively high price of property in Alaska; a small change in the mortgage rate can mean a savings of tens or even hundreds of thousands of dollars over the life of a loan in Alaska.
The 30 year fixed rate mortgage in the state fell around a half point in a month, as did the 15 year fixed rate. The only benchmark rate that went up over the last month was the 5/1 Year ARM. The overall benchmark rate for Alaska for a 30 year fixed rate mortgage stands at 3.56 percent.
The rate is less negotiable in the area than in most places, as the market is dominated by regional banks like Aurora Financial. These regional banks tend to stick more closely together in the rates that they give to borrowers. The real difference in rates, when there is one, comes in the amount of the down payment, the assets that secure the loan, and the credit history of the real estate investor. Basically, the more cash that you have on hand, the more of a deal you can broker for yourself in Alaska.
Because of the relatively high median income and the percentage of millionaires in the state, there are more properties than normal that qualify for a jumbo loan. The minimum amount for a loan to be considered jumbo in the state of Alaska is $417,000, as is the case with most states. You may be able to negotiate a slightly lower mortgage rate if you are investing above this level and you have a good credit score or plenty of assets to secure the loan.
What Is the Cost of Living in Alaska?
The cost of living in Alaska is significant when it comes to mortgage rates because of the relatively high cost of energy in the state. The climate makes it a necessity to consider a bigger power bill and higher maintenance costs for infrastructure. Although some of the higher priced homes in the area come with certain protections against weather wear, most of the properties do not. Overall, the cost of living in Alaska is around 35 percent higher than the average city in the United States. As an example of a utility cost that you will incur upon the purchase of a property in Alaska, utilities are 68 percent more expensive in Juneau than in Portland, Oregon. This is true although all other cost of living factors in the two cities are virtually identical. Most savvy real estate investors take all of this information into consideration when buying a property in the Alaska area.
The costs of living have been taken into consideration by the federal government. Currently, United States Postal Service workers as well as members of the military who are on active duty are eligible to receive a special subsidy that equals a quarter of their base pay as a cost of living allowance. This subsidy allows many of the people in these industries to afford housing in Alaska, further stabilizing the area against huge changes in mortgage rates or property turnover.
What are Alaska Mortgage Rates Predictions for 2016?
The industries that drive the commerce in Alaska are not expected to be especially affected in 2016. As a result, housing turnover will remain about the same. Alaska stands to gain from the implementation of the Keystone XL Pipeline. Look for even more investment capital to enter the area if this policy passes in the DC political circles. Political experts do not expect anything to change on this issue in 2016, as it is an election year.
All other factors that would affect the mortgage rate in the area look to be relatively calm. Future investment in Alaska primes the area for an increase in housing prices down the road at some point. However, it is difficult to predict when this might happen. This is why many people in the field of energy and food production are buying properties now.
The fixed costs of living in Alaska may be higher than in most places. However, the payoff for a successful investment is certainly high as well. If you can get into the real estate market in Alaska, then you should take advantage of the steady commerce and government subsidies that you have within your reach. If the high percentage of millionaires says anything about the results of savvy thinking while owning real estate in Alaska, then lacing up your snow boots may not be such a bad idea!
2 Point Highlight
Alaska continues to be a haven for investors and families who are based in the economy of energy production and food distribution.
If the high percentage of millionaires says anything about the results of savvy thinking while owning real estate in Alaska, then lacing up your snow boots may not be such a bad idea!
