A little over a week ago, the Federal Reserve announced a $600 billion plan to try and lower mortgage rates, and now the Treasury Department is debating to lower it even more, at 4.5% for home buyers. Both organizations are trying to pump up buying activity in the market.

Previously, the majority of effort aimed at boosting the market, was more geared towards home owners not buyers. There is some skepticism with these latest developments as it does not account for things also holding buyers back, such as fear of falling home prices, unemployment, and problems acquiring loans with good terms and achievable downpayments. The chair of the Fisher Center for Real Estate at the University of CA in Berkley, Kenneth Rosen, commented on these difficulties and the government´s actions, saying "The problem is not interest rates,...It's the availability of credit."

Last month, the National Association of Realtors met with the Treasury to work out plans to stabilize home prices with lower mortgage rates. Theoretically, the Treasury would subsidize rates, allowing buyers to have a 30-year fixed-mortgage rate at 4.5%. It is in line with a homebuyer paying points program, which involves a percentage of the home value in return for a lower rate, and the government would pay the cost. According to Lawrence Yun, the chief economist for the organization, this plan would cost $50 billion. Yun remarked that lowering rates to a point below today´s rate, leveling at 4.5%, could generate 500,000 home sales throughout the next year. This would help unload the market, at the moment there are 4.6 million homes sitting there, in other words a 10 month supply of homes, which is 3-4 months more then in a healthy market. Yun feels that a lower mortgage rate would help reduce the fears of buyers about falling home prices. For the last 45 years, rates have not been below 5.37%.