top of page

Will Fed Action Push Home-Loan Interest Rates Lower Over Holidays?

If you are planning to buy a home or refinance your mortgage before the end of the year, there’s a chance for a holiday gift—lower mortgage interest rates.

On October 30th, the Federal Reserve Open Market Committee’s voted to lower the interest charge on its federal funds rate, pushing it down by 25 basis points to a target range of 1.5% to 1.75%.

The Fed justified the rate reduction by saying business fixed investment and exports appear to “remain weak.” In considering future moves, the Open Market Committee said it will “continue to monitor implications of incoming information for the economic outlook.”

However, don’t expect home-loan rates to drop right away. On October 31st, Freddie Mac’s Primary Mortgage Market Survey reported that benchmark 30-year fixed rate home loan interest rates were hovering at 3.78%, up slightly from 3.75% a week earlier. As a result, Chicago lenders were charging a range of 3.75% to 3.857% on 30-year fixed loans, reported A year ago, 30-year fixed loans averaged 4.83%.

Meanwhile, some analysts were buoyed about a slim statewide home sales increase in September. Based on Illinois Realtor data, 12,854 existing homes were sold, up 1.3% from 12,687 units in September of 2018.

“Illinois home buyers rushed in to take advantage of low interest rates, and this boosted sales at a time when traditionally the market begins to slow down,” said Ed Neaves, president of Illinois Realtors.

“September clearly illustrates the roller-coaster nature of home sales this year, although median prices continue to show solid month-over-month gains for those who are in the market to sell,” Neaves said. Chicago sales slippage

However, Chicago saw year-over-year home sales decrease 4.2% with 1,954 sales in September, compared with 2,040 units in September a year ago. The median price of a home in Chicago in September was $292,750 up 2.7%, compared with $285,000 in September of 2018.

“The real estate market in the city of Chicago came back to life in September in a fairly predictable shift into the fall market,” said W. Walker Robison, Jr., partner with Mark Nardone in Lake View-based MW Group, RE/MAX Edge. “We saw fewer homes close in September—with single-family homes down 2.8% and condos down 3.4%—but there was a very nice bump in contracts being written—a 10.6% increase for homes and a 4.2% increase for condos.”

The cyclical nature of Chicago’s residential real estate market over the past decade has left home buyers and sellers along with many veteran brokers scratching their heads, wringing their hands and wondering what the future will bring.

Several top city real estate brokers in the Gold Coast, Lincoln Park and North Side lakefront neighborhoods revealed that during late September and early October, a lull hit the market and many open houses for $500,000 to $1-million-plus properties went unattended by buyers. As a result, listing prices appear to be easing with holidays on the horizon.

Other than a few ultra-luxury downtown condominiums, the only properties that are moving are priced under a half-million dollars, observed several veteran Chicago brokers. Autumn market outlook

After 23 consecutive months of home sales decreases and inventory increases on the Near North Side, the neighborhoods of Lincoln Park, Lake View and North Center, “we have now worked through most of the post-recession demand and high construction costs have slowed some new-construction projects,” observed veteran Chicago broker John Irwin of Baird & Warner.

“Fear of additional property-tax increases, perception of rising crime and an unprecedented influx of new-construction luxury rental properties have all contributed to a gradual slowdown in the real estate market,” Irwin noted.

“We are now approaching what many consider to be a balanced market between buyers and sellers,” Irwin surmised. Based on the extremes of the past 29 years, we have not experienced a “normal balanced” market in quite some time, he said.

“It may not be as dramatic as past markets, but with low interest rates and relatively stable median prices, there are significant opportunities for both buyers and sellers,” Irwin said.

As a result of this balanced market, many motivated sellers are listening to broker advice about the market shift and are lowering prices, or taking properties off the market until the spring of 2020. Others are considering renting their homes.

What does all this marketing mumbo-jumbo mean to the average home purchaser or the family seeking to refinance?

Experts say the current mortgage-rate environment may be fleeting, so would-be buyers and refinancers should move quickly to lock in affordable interest rates before the end of the year. And, ask your lender for a “float-down” option in case the Federal Reserve Board lowers rates further at its next meeting in December.

For more housing news, visit Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit

“The book is Escaping Condo Jail by Sara Benson and Don DeBat. I would say that anybody thinking about buying a condo, or even anybody serving on a condo board, or anybody who has any connection to a condo, this is must reading—all 600 and something pages. Thanks a lot for a great book!”


Steve Sanders, “Your Money Matters” WGN TV, December 22, 2014

By Don DeBat

  • LinkedIn - Black Circle
Don DeBat's RSS Feed
Recent Posts

Site Sponsors & Affiliates

bottom of page