Current Mortgage Rates and What They Mean for Chicago Buyers and Sellers

As of mid‑January 2026, mortgage rates have fallen to their lowest levels in more than three years, offering a meaningful shift from the high‑rate environment that constrained buyers in 2023‑2025:

• 30‑year fixed mortgage rates are averaging around 6.06%, down from over 7% a year ago — a nearly full‑percentage‑point improvement.

• 15‑year fixed rates have also eased, offering more appealing options for buyers prioritizing faster equity build‑up.

• Mortgage applications — for both purchase and refinancing — are increasing as more borrowers respond to these lower rates.

This drop to the low‑6% range is historically significant: while still above the ultra‑low rates of the pandemic era, rates now are more affordable than at almost any point since 2022.

What This Means for Chicago Buyers

Increased Affordability — A Real Opportunity

Even modest declines in interest rates improve buying power. For example:

• A homebuyer locking into a 6%‑range mortgage today could save hundreds per month compared to last year’s peak rates — money that can be redirected toward down payment, upgrades, or savings.

• Affordability models from national housing forecasts suggest that some major metros — including Chicago — might start to meet basic affordability tests again when rates, prices, and incomes align.

For a city like Chicago — where home prices remain elevated relative to local incomes — improved mortgage rates help expand the buyer pool and encourage households that were previously sidelined to rejoin the market.

Competition Might Heat Up in Key Neighborhoods

As rates drop, more buyers become financially comfortable entering the market — which can result in:

• Shorter time on market for well‑priced homes

• More multiple‑offer situations in desirable Chicago neighborhoods

• Greater urgency among buyers who don’t want to risk rates rising again

This phenomenon has already been reported in national market commentary about renewed housing activity as rates ease.

What Sellers Should Know

Buyer Demand Begins to Lift

Lower mortgage rates are one of the strongest levers for boosting buyer confidence. When monthly payments become more affordable, buyers who were previously priced out or hesitant may decide now is the time to act. This can increase foot traffic at open houses and strengthen offer depth.

Price Stability Helps Position Listings

Coupled with improving inventory and slowing home price growth nationally, many sellers may find that buyers are still willing to pay competitive prices — especially when combined with attractive financing.

However, it’s important to balance pricing with current market conditions: while rates are improving, inventory remains somewhat limited in Chicago’s most popular areas, meaning accurately priced homes often get the best results.

What Market Experts Are Forecasting Next

Mortgage market forecasts suggest:

• Rates may hover in the low‑ to mid‑6% range through 2026, with occasional dips depending on economic conditions and Federal Reserve policy.

• Even small improvements in rates tend to increase buyer interest and market activity — especially around traditional spring buying seasons.

In short, while rates aren’t returning to the historic lows of 2020–2021, the current environment represents a meaningful shift that can work to your advantage — as a buyer or seller — if you act with strategy and timing.

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Ranked as a top 1% team in the Chicagoland market, Cory Tanzer and the Cory Tanzer Group specialize in the Chicago, North Shore, and Western Suburbs real estate market. With deep local market expertise and a proven track record, Cory and his team help clients buy and sell with clarity, confidence, and results.