4.5% interest rates could spur home sales.

There is talk of reducing interest rates for homeowners to 4.5%. The plan is outlined below. The problem I see is buyers with great credit are still having trouble getting loans. Banks just don't want to lend. A lower interest rate could spur activity, but will they be able to secure the financing and actually buy???

Under a Treasury plan, lenders could sell newly issued mortgage-backed securities to the government provided the interest-rate on the loans collateralizing the securities was no higher than 4.5 percent. To pay for the plan, the Treasury would issue bonds at 3 percent, creating a 1.5-percent spread that it could use for buying the securities. Those securities would then be purchased by secondary mortgage market companies Fannie Mae and Freddie Mac, which are under federal conservatorship. To date, tens of thousands of Realtors have sent letters to their members of Congress asking for quick action to help housing, which is widely considered a crucial first step to a broader economic recovery. Some analysts have calculated that an interest-rate buydown could help as many as 2.5 million households.