1% = 10% Rule

If you plan to buy an average priced home in metropolitan Phoenix right now, your greatest risk is that interest rates will increase and you’ll have to buy less home for the amount of money you can spend each month on your mortgage.

A 1% increase in interest rates lowers the amount of home you can buy by about 10%.

  • 4.80% 30-year mortgage with $1,049/month payment = $200,000
  • 5.80% 30-year mortgage with $1,049/month payment = $178,837
  • 6.80% 30-year mortgage with $1,049/month payment = $160,595

For average priced and less expensive homes in the Phoenix area, I think your greater risk by far is that interest rates will increase, not that home prices will fall.