Business: City Bank

Cheap mortgages in Chicago

Psst. Want a mortgage for under 8%? Try moving to Chicago.

Interest rates on most home loans have long hovered around 9½% or 10% or more, but last week more than 2,000 families in Chicago were able to get financing at a bargain 7.99%. The funds involved, totaling $83 million, were raised through tax-free municipal bonds in an intriguing experiment in encouraging urban homeowning.

The cut-rate mortgages were devised by the E.F. Hutton brokerage firm, working closely with city hall. Alarmed by the continuing exodus of Chicagoans to the suburbs—the city has lost about 50,000 middle-class citizens a year since...

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