FHA mortgage rates in Chicago, Illinois and other major metro areas dropped again last week, much to the surprise of housing analysts. The Federal Reserve also announced they would hold the federal funds rate (that is used for inter-bank borrowing) near zero percent for the foreseeable future.
The table above shows Chicago FHA rate averages for the three most popular loan categories: 30-year fixed, 15-year fixed, and the 5/1 adjustable rate mortgage (ARM) loan.
Outlook: Chicago, Illinois FHA Rates for 2015
Home loans insured by the Federal Housing Administration (FHA) are popular among home buyers who are seeking a low-down-payment financing option. Through this program, Chicago borrowers can qualify for a mortgage with a down payment as low as 3.5% of the purchase price. FHA loans are especially popular with first-time home buyers, and for this very reason.
The Chicago, Illinois FHA mortgage rates shown above are based on our own proprietary survey of five HUD-approved lenders across the metro area. It’s important to note, however, that these are average rates for Illinois borrowers, and that your rate may vary based on your qualifications as a borrower (credit score, debt ratio, etc.). So there is no guarantee you will qualify for the Chicago FHA rates in the table above.
At the beginning of 2015, Federal Reserve officials said they would keep the federal funds rate near zero for at least a couple more months. This means we probably won’t see any major changes to FHA lending rates between now and then. Just note the word “probably” in that last sentence. Nothing is certain when it comes to the mortgage market.
The Fed’s status-quo policy is good news for Chicago home buyers, because it means we could continue to see 30-year mortgage rates at or below 4% for the foreseeable future. These and other factors should bolster the local housing market in 2015, to some degree.
Freddie Mac, the government-controlled buyer and seller of mortgage-backed securities, recently predicted that long-term (30-year) loan rates could rise gradually throughout 2015. They expect the average rate for a 30-year home loan to climb to around 4.7% by the end of this year.
But they’ve been wrong before. In fact, they predicted gradually rising interest costs for 2014 as well — but we saw just the opposite. So it’s hard to say what kind of FHA rates Chicago, Illinois borrowers will see later in 2015.
My guess is that mortgage rates will be higher at the end of the year than they are now, due to the Federal Reserve’s anticipated course of action and general economic improvements. But that’s just an educated guess. Don’t bank on it!
A Look at Home Prices
We’ve covered FHA loan rates for Chicago, Illinois. But what about home prices? How have local property values fared over the last year or so? And what are they expected to do going forward? Here’s an update on home-price trends for Chicago, Illinois and the surrounding area.
At the start of 2015, the median home price for this metro area was $205,000. That’s an average of the two median figures given by Zillow and Trulia, which crunch their numbers in different ways. So it’s a pretty good indicator of the actual mid-point for home prices in the Chicago metro area.
Local house values rose by around 2% during 2014. The gains are expected to be even smaller in 2015, a sign that the housing market is cooling. This is good news for home buyers, especially those who plan to buy sometime later this year. With Chicago mortgage rates near record lows, and home prices fairly stable, 2015 could be a good year to buy a house in the Chicagoland area.
Disclaimer: This page provides FHA loan rates for Chicago, Illinois. It is based on an informal survey of local mortgage lenders. The actual interest rate you receive will largely depend on your credentials as a borrower, particularly your credit score. So your rate will likely differ from the averages shown at the top of this page. This page also includes third-party predictions / projections regarding FHA interest rates. Such forward-looking statements are the opinions of the authors and do not necessarily reflect the views of the publisher. We make no claims or guarantees about future FHA rates in Chicago, home prices, or other housing and economic trends.