Mr Frazer escaped injury after his car was set alight outside his house on Markethill's Tandragee Road at around 1.15am on Sunday.
He was home alone - and asleep in bed - when police on patrol in the area noticed smoke and traced the fire to his property.
Officers evacuated him to safety, before also alerting neighbours. A nearby van was driven away from the scene by police.
Mr Frazer is a high profile member of the Ulster People's Forum, which was established to voice loyalist anger at Belfast City Council's decision to limit the number of days the Union flag flies over City Hall.
He told UTV that if the police had not reacted so quickly, he could have died.
He said he awoke to hear banging on the windows and thought it was his son returning from a night out.
"At that stage, I didn't know what was going on.
"The police were banging on the door: 'Get out, get out.'
"It is quite obvious, whatever this was, it was an attempt on our lives here."
It can't be called anything less than attempted murder.
Willie Frazer, Ulster People's Forum spokesperson
The veteran victim's campaigner and founder of FAIR (Families Acting for Innocent Relatives) said the flames had spread to the door and were catching on the roofspace.
"I'm not going to be intimidated by them [those responsible]", he added.
His son Philip arrived back home in the early hours on Sunday to the sight of the police and fire brigade outside the property.
He echoed his father's sentiments on the PSNI's swift actions.
"If the police had not seen what was going on, today it might be a different story. He mightn't be with us today unfortunately - but thankfully he is," Philip said, before adding that the perpetrators had achieved nothing.
The car was completely destroyed in the blaze but no one was hurt.
Police are treating the incident as arson.
"NIFRS were informed and police used hand held extinguishers and a garden hose to damp the fire down and prevent it from spreading until the Fire Service's arrival," a PSNI statement said.
Sergeant Gwyn, of Armagh PSNI, added: "This was a very dangerous fire and due to the quick thinking actions of officers out on patrol no one was hurt."
"We have launched an investigation and have conducted house to house enquiries.
"We are appealing to any member of the public who has information in relation to the fire to contact us in Armagh on 0845 600 8000."
The consequences, if we had not caught this fire in time, do not bear thinking about.
Sergeant Gwyn, Armagh PSNI
Danny Kennedy, Ulster Unionist MLA for Newry and Armagh, has condemned the arson attack.
"This is a very sinister development. Everyone has the right to express their views in a democratic society and this attack appears to be an attempt to interfere with that democratic right," he said.
"I am very relieved that William and his family have escaped injury and acknowledge the vigilant work and quick thinking of local PSNI officers in spotting the fire and getting everyone to safety. They prevented it from spreading to other properties and causing serious injury."
TUV Leader Jim Allister said: "Last night's despicable arson attack at the home of William Frazer was an act of terrorism that bears all the hallmarks of attempted murder. It underscores the continuing threat from republican terrorists.
"The alertness of the passing police patrol averted a possible tragedy. I trust the culprits will be speedily brought to justice.
"My thoughts are very much with the Frazer family. I know William will not be deterred, but the trauma for any family in this situation is immense."
Conor Murphy, Sinn Féin MP for Newry and Armagh, has also condemned the attack.
"Whoever was responsible for the arson attack outside Willie Frazer's home last night was not representative of the vast majority of people in this constituency. Whatever people's views are of Mr Frazer's public statements or actions, there can be no justification for an attack like this on a family home," he said.
Dominic Bradley, SDLP MLA for the area, said attacks of this nature have no place in a democracy.
"I praise the efforts of the quick-thinking PSNI officers who spotted the fire in the early hours of the morning, and whose brave efforts ensured that the fire was quickly extinguished.
"Whilst we may not all share the same views, we must allow for all colours of opinion in a democratic society, and engage in a political process to find common ground in order to work towards a better future for all, and to desist from expressing extreme views directed at any group or individual," he added.
Stewart Dickson MLA, Alliance Justice spokesperson, said: "There can be no justification for this attack. No ifs, no buts.
"Lives could have been lost in this attack," he added.
"If anybody has any information about this attack then I would urge them to contact the police. Those responsible obviously have no regard for the consequences of their actions."