Utah mortgage rates are near their all-time low. Â With a strong economy and a fast-moving housing market, there has never been a better time to buy a home in Utah than right now.
Current Rates
Utah’s current mortgage rates average:
- 30 year fixed – 3.625%
- 20 year fixed – 3.375%
- 15 year fixed – 2.75%
- 5/1 Adjustable Rate Mortgage – 2.875%
- FHA Loan (First-time home buyers with 100% financing) – 4.75%
- VA Loan – 3.375%
Utah Lending Trends
Credit unions rule the Utah financial landscape. Â As not-for-profit financial institutions, credit unions are able to pay higher interest rates on savings accounts and certificates of deposit and charge lower fees and offer lower interest rates on loans. Â However, some credit unions, like banks, do not service their own loans. Â Instead, they are sold to a variety of larger lenders for servicing over the duration of the mortgage. Â While small, credit unions in Utah are not wanting for mortgage options.
Popular with first-time home buyers, the Federal Housing Administration (FHA) offers 15-year and 30-year fixed rate loans to first-time home buyers. Â These loans, serviced by Utah Housing Corporation, are associated with higher interest rates because of the greater risk associated with first-time buyers. Â But with 100% financing available and no pre-payment penalties, FHA loans offer buyers an opportunity to own their home without a large down payment.
Likewise, loans insured by the Veterans Administration (VA) are available with no down payment, no prepayment penalty, and no Personal Mortgage Insurance (PMI). Â With 15-year and 30-year fixed rate options, VA loans carry certain restrictions for homes being purchased. Â For instance, homes requiring extensive renovations may not be eligible for a VA loan because they cannot be occupied upon closing. Â VA loans are strictly for current and former members of the military and require additional paperwork proving military service. Â Banks and credit unions throughout the state of Utah are happy to provide home loans to veterans, many lowering or waiving associated fees.
In addition to the traditional 30-year fixed mortgage and 15-year fixed mortgage, credit unions throughout the state of Utah also offer a non-conventional 20-year fixed mortgage time frame. Â Many banks and credit unions throughout Utah offer financing with as little as 5% down. Â 5- 7- and 10-year adjustable rate mortgages (ARM) are also available for home buyers who either do not intend to be in their home long-term or who intend to pay off their mortgage quickly.
Credit Unions vs Banks
Besides being non-profit entities, credit unions service more of their own loans than banks.  This gives credit unions opportunities to extend mortgages to quality borrowers whose financial background doesn’t fit into conventional lending parameters. Despite having more flexible lending criteria, credit union loans tend to have lower incidences of delinquency.  A person is less likely to be able to acquire a loan they cannot afford when working with a credit union that services its own products.
Banks, on the other hand, have the advantage of volume. Â More transactions mean more money to lend, especially to someone with a stellar credit history. Â A person is far more likely to be able to finance a home just outside of their projected price range with a bank than they are with a credit union.
Predictions For the Future
On the heels of the federal reserve’s decision to increase interest rates one-quarter of a percent in December 2015, consumer fears of higher mortgage rates rippled throughout the nation.  While no other market has benefited more from ultra-low interest rates than the housing market, 30-year mortgages are actually priced off of 10-year Treasury note yields.  These may rise as short-term rates climb, but not as quickly.  The federal reserve is aiming for a 1% rate climb over the next year, with incremental increases every few months.  Such conservative rate climbs may affect the Utah housing market over the course of the next few years, especially as rates slowly climb back to the 6% of 2008.
Adjustable-rate mortgages (ARM) may represent the largest change to mortgage interest rates in the near future. ARM’s are typically modified annually and could increase about a half a percentage point over the next year with increases in the federal reserve’s benchmark short-term interest rate.  However, should job creation and economic growth keep pace with interest rate increases, any increase in mortgage rates will be proportionate to an increase in income.
Utah itself is experiencing an economic boom. Â With a low cost of living and highly educated workforce, many companies are looking to Utah for new divisions of their organizations. Â Praised as the “most dynamic economy” in the country, Utah boasts an astounding 3.5% unemployment rate, compared to the nation’s 5.0% unemployment rate. Â Such economic trends are expected to continue as Utah has been able to weather economic storms that have crushed economies elsewhere in the nation. Â Any rise in interest rates may slightly slow the housing market in the state, but low inventory will have a much greater impact as home buyers look to put down roots in Utah.
Whether you are a first-time home buyer or a veteran to the process, Utah mortgage rates suggest that now is the time to buy. Â With a booming economy and steady home value growth, this sound investment will only pay off in the long run.
2 Point Highlight
As non-for-profit financial institutions, credit unions are able to pay higher interest rates on savings accounts and certificates of deposit and charge lower fees and offer lower interest rates on loans.
Adjustable-rate mortgages (ARM) may represent the largest change to mortgage interest rates in the near future.
