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The lending landscape in Chicagoland is looking up, and that\u2019s terrific news for agents and their clients.<\/p>\n
\u201cCurrently we are seeing a large uptick in buyer sentiment,\u201d said Tariq Khwaja, area manager at Citywide Home Mortgages. \u201cRates have started to come near three-year lows, and people are aware of it.\u201d <\/p>\n
Referencing a statistic that about 9.8 million more people become eligible for homeownership once rates fall completely into \u201cthe fives on everything,\u201d he noted that the national average was around 6.1%.<\/p>\n
\u201cWe\u2019re a quarter of a point away from 10 million more people becoming eligible,\u201d he explained. \u201cAs these markets are moving, people are getting excited. Somebody who was preapproved in summer and didn\u2019t find a house is now being told that the same purchase price range could cost them $250 less per month. Everybody\u2019s always excited to save several thousand dollars a year.\u201d <\/p>\n
Ben Cohen, managing director at Rate, said buyers continue to exercise caution as rates remain high.\u00a0<\/p>\n
\u201cWith higher interest rates leading to increased monthly mortgage payments, many buyers are reevaluating their financial capabilities,\u201d Cohen said. \u201cAs borrowing costs rise, buyers find their purchasing power diminished. Many potential buyers are postponing their purchasing decisions due to current mortgage rates (around 6.1% to 6.3%).\u201d <\/p>\n
Cohen said this presents a good opportunity to work with agents to develop targeted marketing content highlighting affordable housing options, as well as to provide educational resources about market trends and the potential for rate changes. These strategies can encourage buyers to stay informed and engaged even if they are not purchasing immediately.<\/p>\n
\u201cIn times of uncertainty, buyers seek knowledgeable guidance,\u201d Cohen said. \u201c[We] can reinforce that image as a trusted source by sharing success stories, case studies and expert insights on navigating the changing mortgage landscape. Engaging potential buyers through social media platforms can also foster trust and connection.\u201d<\/p>\n
Eva Pawlus, senior mortgage consultant at Wintrust Mortgage, said many buyers have shifted from waiting on rates to drop. Instead, they are focusing on opportunity and strategy.<\/p>\n
\u201cThey understand that rates are not going to go back to COVID rates and see that process of real estate climb up every year,\u201d Pawlus said. \u201cMany are moving forward to secure homes before prices climb further.\u201d<\/p>\n
Rate expectations are not uniformly affecting buyers, Pawlus observed. Rather, she sees a mix of buyer behaviors. Some continue to delay making a purchase, while others are finally prepared to buy.<\/p>\n
\u201cThe strongest buyers are accelerating, not waiting,\u201d she said. \u201cInstead of trying to time the market, buyers are adjusting structure \u2014 using rate buydowns, ARMs and seller credits to make deals work.\u201d<\/p>\n
Pawlus noted that rates are slightly lower than last year (6.11% as of Feb. 5, down from 6.89% at the same time in 2025) but remain elevated compared to previous cycles. She has seen a small spike among investment buyers, especially those making condo purchases in the city. They are taking advantage of rising rents and trying to buy so they can rent out units and seeking more flexible and creative lending options. <\/p>\n
\u201cWe are seeing more seller-paid buydowns, expanded physician credit programs \u2014 we just rolled out 0% down for up to $2 million purchase for qualified physicians \u2014 and stronger bank portfolio products,\u201d Pawlus said. \u201cThe best agents are partnering closely with lenders to lead with education and strategy. Some key advice is to focus on monthly payment comfort, not the headline rate, and exploring buydowns and ARMs.\u201d <\/p>\n
Cohen said the fluctuating rates are significantly influencing buyer behavior in the Chicagoland market, with a recent uptick in activity due to lower rates. <\/p>\n
\u201cLast year saw interest rates peak near 7%, which caused many potential buyers to hesitate,\u201d Cohen said. \u201cThey opted to delay their purchasing decisions, preferring to wait and see how the market would evolve. Currently, the recent slight decline in interest rates has reignited buyer interest, leading to application levels\u2019 surging to a three-year high.\u201d <\/p>\n
Khweja said people are realizing that now is the time to make a decision, as winter months typically provide more flexibility regarding negotiating power, as opposed to the busy spring and summer months.<\/p>\n
\u201cThe folks I have pushing through in this negative-10-degree weather are absolutely motivated and excited to do business right now,\u201d Khweja said. \u201cIt\u2019s cold. Not many people want to deal with that, so you have to be super motivated. But as the rates come down now to multiyear lows, it does turn up the heat and turn up the search.\u201d<\/p>\n
Khweja speaks with his agents two or three times a week, and many of those conversations involve prospective homebuyers who are returning to the market.<\/p>\n
\u201cIt\u2019s almost as if my agent partners are coming to me before some of my clients,\u201d Khweja said. \u201cThe clients know interest rates are moving and I can send them the updated preapproval, and they can find out the new payment. But before that\u2019s happening, they\u2019re talking to the Realtor, going, \u2018Hey, we hear rates are starting to move. Let\u2019s go look at more houses.\u2019 All they know is that the rate market is moving and they\u2019re going to get a better deal than they could, which means the payment is going to be even more affordable and they had better act now.\u201d<\/p>\n
Khweja said the non-QM markets have started to come back, where more buyers are doing no-doc, investor DSCR and bank statement programs. Investor activity is also picking up, though not necessarily corporate buyers.<\/p>\n
\u201cI\u2019m seeing some clients that own five or 10 properties coming back to do the cash out, the FDR, no-docs or purchases,\u201d Khweja said. \u201cI\u2019m also seeing a lot of self-employed people coming back in the bank statement loans from those relationships. It\u2019s a different piece of business that\u2019s accelerating right now, because those people need to do those deals. They\u2019re not the same as the 800-credit, W-2 that\u2019s $600,000 a year, and \u2018I want a $2 million house\u2019 buyer.\u201d<\/p>\n
Cohen said non-QM loans are appealing because they can accommodate various income types such as self-employment income, bank statements and assets instead of traditional income verification. They typically allow borrowers to access loan amounts larger than conventional limits and may offer unique features such as interest-only payments or balloon payment structures.<\/p>\n
\u201cMany self-employed individuals struggle to meet income documentation standards for traditional loans,\u201d Cohen said. \u201cNon-QM loans offer them the flexibility to secure financing based on their actual cash flow.\u201d<\/p>\n
Cohen said adjustable-rate mortgages are also popular due to their lower initial interest rates compared to fixed-rate mortgages, particularly for buyers who expect to sell or refinance before the rate adjustment period. Buyers are also turning to FHA loans and conventional loans with low down-payment options, as well as VA loans and first-time homebuyer programs.<\/p>\n
\u201cVarious programs offer down payment assistance and favorable loan terms, which is particularly enticing for first-time buyers navigating affordability challenges,\u201d Cohen said. \u201cMany of these programs include education and counseling, helping buyers make informed decisions.\u201d<\/p>\n
Pawlus said 7\/1 and 10\/1 ARMs are currently popular, as well as two- and one-year buydowns, physician loans and rehab loans.<\/p>\n
\u201cA lot of buyers were asking sellers for credits to cover the buydown so the rate would be reduced for the first and second year or one year, depending on which one they would choose,\u201d Pawlus said of buydowns. \u201cThat helped them tremendously with elevated rates, the affordability and the payment. That would reduce the payment while they\u2019re hoping that in the next two years there\u2019s going to be a window to refinance that mortgage.\u201d<\/p>\n
Pawlus highlighted rising property taxes and insurance costs as factors affecting the overall purchasing power for buyers, while low inventory contributes to limited affordability in certain neighborhoods such as Lake View and Roscoe Village. As a result, agents should expect to see more non-QM creative financing and portfolio lending. Rehab loans will be key to buyers seeking to maximize their purchase power. <\/p>\n
\u201cAs we continue to have inventory issues, strong rehab and construction product will be crucial,\u201d Pawlus said. \u201cThere are properties that don\u2019t make sense for flippers but would make sense for a homeowner who wants to rehab and live in the property.\u201d<\/p>\n
Cohen pointed to limited inventory and a high concentration of buyers as driving intense competition in the city, elevating prices and making affordability a major hurdle.\u00a0<\/p>\n
\u201cSuburban areas may present more affordable options compared to the city, making it easier for first-time buyers to enter the housing market,\u201d Cohen said, warning that some suburbs may experience faster price growth.<\/p>\n
\u201cBuyers in Chicago often have a more optimistic view regarding future appreciation, pushing them to commit to purchase despite current price pressures,\u201d Cohen said. \u201cThe pandemic has shifted some buyer preferences toward suburban living, resulting in higher demand for homes outside the city. Buyers are seeking larger properties with more outdoor space, changing the dynamics of lending as more households look to secure loans for these suburban homes.\u201d<\/p>\n
Khweja said there\u2019s still strong condo inventory in the city but that the competition is not as strong as it is for single-family homes in the suburbs. \u201cIn the condo market, there might be two offers on a place,\u201d he said. \u201cBut in the suburbs, there could be six offers, and they\u2019re going to be on a $700,000 house that\u2019s going to go 8% over asking \u2026 price is what you pay, value\u2019s what you get.\u201d<\/p>\n
Expert Sources<\/p>\n
Ben Cohen<\/b><\/p>\n
Rate<\/p>\n
Eva Pawlus<\/b><\/p>\n
Wintrust<\/p>\n
Tariq Khwaja<\/b><\/p>\n
Citywide Mortgage<\/p>\n","protected":false},"excerpt":{"rendered":"The lending landscape in Chicagoland is looking up, and that\u2019s terrific news for agents and their clients. \u201cCurrently…\n","protected":false},"author":3,"featured_media":626652,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[5124],"tags":[26859,267695,960,267696,267697,267698,5386,1818,267699,267700],"class_list":["post-626651","post","type-post","status-publish","format-standard","has-post-thumbnail","category-chicago","tag-rate","tag-ben-cohen","tag-chicago","tag-chicagoland-lending","tag-citywide-home-mortgages","tag-eva-pawlus","tag-il","tag-illinois","tag-tariq-khwaja","tag-wintrust-mortgage"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/116159152605528847","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/626651","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=626651"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/626651\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/626652"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=626651"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=626651"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=626651"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}