The US Treasury is working on a new plan to help revive the ailing housing market by reducing mortgage rates on new home loans, according to people briefed on the situation.

The plan, which is at preliminary stages and could change, would involve using government-sponsored mortgage financiers Fannie Mae and Freddie Mac to push down rates on 30-year mortgages to as low as 4.5 per cent, or almost a full percentage point lower than current levels.