The Treasury Department is considering a plan to revitalize the home market by reducing mortgage rates for new mortgages, according to people familiar with the matter.

The plan, which is in the development stages, would use Fannie Mae and Freddie Mac to bring loan rates down as low as 4.5%, a full percentage point below the prevailing rates for 30-year fixed loans. Government officials are under pressure to stem foreclosures, which underpin much of the financial crisis.

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