Mortgage rates have been a central focus for homeowners, buyers, and real estate investors ever since they began surging in 2022. Fueled by inflation and the Federal Reserve’s interest rate hikes, these elevated rates have priced many buyers out of the market and left would-be sellers stuck in place. But a new approach from the White House could bring a shift — one that focuses not on the Fed, but on a more subtle yet powerful economic indicator: the 10-year treasury yield.
Let’s take a look at this developing strategy, how it could affect mortgage rates, and what it means for the Illinois housing market.
Why Mortgage Rates Remain High in 2025
Despite inflation easing and the Fed pausing rate hikes, mortgage rates have remained high. That’s because mortgage rates, while loosely connected to the Fed’s benchmark rate, are more closely tied to the 10-year treasury yield.
When investors are confident in the economy or fear rising inflation, treasury yields increase. Since mortgage rates are typically set within 2–3% of the 10-year treasury yield, an increase in the yield pushes mortgage rates up.
In February 2025, the 10-year yield sits at around 4.51% — well above its levels during the previous Trump administration. This persistent rate has contributed to low inventory, sluggish sales, and affordability challenges for buyers.
The White House’s Surprising Approach
Rather than putting pressure on the Federal Reserve to cut interest rates, the Trump administration is now turning its focus toward reducing the 10-year treasury yield. Newly confirmed Treasury Secretary Scott Bessent has outlined this as a core strategy to ease mortgage rates and improve housing affordability.
“The president wants lower interest rates, and he and I are focused on the 10-year Treasury,” Bessent said. “He believes that if we deregulate the economy — if we get this tax bill done, if we get energy down — then rates will take care of themselves.”
In other words, the administration is betting that economic growth strategies such as tax reform and deregulation will ease inflationary pressures, reduce borrowing costs, and indirectly lower mortgage rates.
Can This Strategy Work?
It’s a bold move, but experts are cautious.
According to Austan Goolsbee, President of the Chicago Federal Reserve, controlling long-term interest rates like the 10-year yield is not that simple. Factors like global economic conditions, investor sentiment, and federal debt levels all play a role.
“We don’t control long-term rates. They are linked to things like Treasury debt issuance, market expectations of inflation, and global demand,” said Goolsbee.
Additionally, concerns over tariffs and rising government debt may continue to push yields higher, counteracting any benefits from domestic policy shifts.
What This Means for Illinois Homeowners and Sellers
In areas like Rockford, Hoffman Estates, and Belvidere, many homeowners are still locked into low-rate mortgages from the 2020–2021 period. These homeowners are reluctant to sell and take on new loans at higher rates. That’s created a bottleneck in the local housing market.
If the White House succeeds in bringing down treasury yields, mortgage rates could follow — giving buyers better affordability and sellers more flexibility.
But until that happens, what can Illinois homeowners do?
- Explore selling as-is: If you’re thinking of moving but don’t want to deal with repairs or traditional listings, consider a direct homebuyer. Modern Times Homes LLC buys houses in any condition, helping sellers move quickly with no commissions or fees.
- Capitalize on equity: Even with higher rates, many homeowners still hold significant equity. Selling now may provide enough cash to downsize or relocate comfortably.
- Consider renting your home: If you’re relocating and locked into a low mortgage, renting your home out may allow you to keep your rate while financing another property. Here’s how that works.
Final Thoughts
The White House’s focus on reducing the 10-year treasury yield marks a shift in how policymakers are tackling housing affordability. While it’s uncertain how effective this approach will be, it’s clear that mortgage rates will remain a key battleground for the economy in 2025.
For Illinois homeowners looking to sell in this unpredictable environment, understanding your options is crucial. Whether you want to sell fast, avoid repairs, or unlock your equity, Modern Times Homes LLC is here to help.
📞 Call 815-974-0359 or request your free cash offer today — no pressure, just real solutions.
Want to learn more? Here’s our guide to selling an inherited house in Illinois.