You probably saw the headline yesterday. Maybe a friend texted it to you. Maybe you caught it scrolling through the news over coffee. Mortgage rates dropped below 6% for the first time in three and a half years.
The 30-year fixed-rate mortgage hit 5.98%, according to Freddie Mac's weekly survey released February 26th. A year ago, that same rate sat at 6.76%. The 15-year fixed came in at 5.44%.
Those numbers might not mean much on their own. So let's make them real.
What This Looks Like on a Monthly Payment
Say you're looking at a home priced around $370,000, which is right in line with the Chicago metro median. A year ago, at 6.76%, your monthly principal and interest payment on a 30-year loan would have been roughly $2,405. At today's 5.98%, that same loan costs about $2,215.
That's $190 a month you keep. Over the life of the loan, it adds up to more than $68,000.
Not life-changing in a single month. But over time? That's a kitchen renovation. A year of private school tuition. A serious head start on your kid's college fund.
Why "The Fives" Feel Different
Freddie Mac's chief economist, Sam Khater, called this rate drop "meaningful" and said it would drive more buyers into the spring market. That's worth paying attention to, because economists don't usually throw that word around for three basis points.
Here's the thing: there's a real psychological weight to crossing below 6%. "The fives" sounds fundamentally different from "the sixes," even though the math between 6.01% and 5.98% barely moves the needle. But perception moves markets. And this perception shift is already pulling hesitant buyers off the sideline.
Mortgage applications have been ticking up, and the spring buying season was already expected to be the most active in two years. This just poured fuel on it.
Chicago's Market Is Already Moving
The local numbers tell the story of a market that was heating up before rates even dropped.
The DePaul Institute for Housing Studies, in collaboration with Illinois REALTORS, projects Chicago metro home sales will climb 5.1% this year, reaching just over 80,000 closed transactions. Metro median prices are expected to rise about 5%, pushing past $386,000 by October.
January's city of Chicago median sale price came in at $355,000, up 1.4% year over year according to Redfin. Homes are averaging 76 days on market. And some neighborhoods are outpacing the city by a wide margin. Bridgeport posted a 24.2% jump in median price. The Near North Side rose 6.9%. The Near West Side climbed 3.5%.
Meanwhile, inventory is still sitting about 12% below historical averages. That math is simple: more buyers entering the market, not enough homes to go around, and prices that keep climbing.
What This Means If You're Thinking About Buying
The window is real, but it's not infinite. Rates at 5.98% today don't guarantee rates at 5.98% in June. Fannie Mae projects we may see something around 5.9% by year end. The Mortgage Bankers Association thinks rates could settle closer to 6.1%. Either way, the direction has been consistently downward, and that trend is pulling demand forward.
If you've been watching the market for the past two years waiting for things to feel more affordable, this is the moment the math starts working again. Homes aren't cheap. Chicago prices are still rising. But the financing cost, the piece you actually pay every month, just got meaningfully better.
The smart move isn't to rush. It's to get prepared. Talk to a lender. Understand what you qualify for at today's rates. Look at neighborhoods where your budget gives you real options. And know that well-priced homes are going to move fast this spring. The ones that sit will be the overpriced ones.
What This Means If You're Thinking About Selling
Spring 2026 is shaping up to be the strongest seller's environment in two years, especially in the city. Downtown inventory is at historic lows. Buyer demand is climbing. And correctly priced homes are attracting multiple offers in several neighborhoods.
The emphasis there is on "correctly priced." The data from the Chicago Association of REALTORS and DePaul's forecast both point to the same reality: buyers are coming back, but they're informed. They know what comparable homes sold for. They know what their monthly payment will be. An overpriced listing doesn't create a bidding war. It creates crickets.
If you're considering selling, the smartest thing you can do right now is understand your home's actual market value before you list. Not Zillow's estimate. Not what your neighbor got in 2022. What a buyer in March 2026, with a 5.98% rate and a tight inventory market, would pay for your specific home.
What This Means If You Already Own
You might not be buying or selling anytime soon, and that's fine. This rate drop still matters to you.
If you locked in your mortgage at 6.5% or higher during 2023 or 2024, run the refinance numbers. The break-even point on closing costs at today's rate is typically 18 to 30 months for most borrowers. That means if you plan to stay in your home for at least two more years, refinancing could save you real money.
And if your home has appreciated enough that you've crossed the 20% equity threshold, refinancing also lets you drop private mortgage insurance. That's a direct monthly savings on top of the rate reduction.
One more thing to keep on your radar: Cook County first-installment property tax bills for 2025 are due April 1st this year, about a month later than usual. If you haven't budgeted for that yet, now's the time.
The Bigger Picture
A year ago, the conversation was about whether rates would ever come back down. Six months ago, it was about whether the Fed's rate cuts would actually translate to lower mortgages. Today, we're looking at the first sub-6% rate since September 2022, a Chicago market forecast projecting 5% price growth and 5% more transactions, and a spring that's already generating momentum.
None of this happened overnight. It was 18 months of Federal Reserve policy, a gradually cooling labor market, and a bond market that finally started pricing in what most economists had been saying for quarters.
Here's what I'd do if I were you: whether you're buying, selling, or staying put, take 30 minutes this week to understand where you stand. Check your rate. Check your equity. Check what homes are selling for on your block. Information is free. Being caught off guard isn't.
