Bush 'to unveil subprime plan'
Thursday, 06 Dec 2007 10:52
President Bush is expected to announce help for sub-prime borrowers
US president George Bush is today expected to announce plans to provide aid to struggling American homeowners.
Reports claim the US leader will outline proposals to freeze
interest rates on certain types of subprime home-loans, in an attempt to stem the number of people defaulting on their mortgage payments.
Rising default levels in the US subprime market, which makes home-loans available to those on low incomes or with poor credit ratings, have shaken the country's economy and prompted a global credit squeeze.
Leading financial institutions have written off billions of dollars as a result of their exposure to bad debts in the US subprime sector and have subsequently become increasingly reluctant to make credit available to fellow banks, with consumers also subject to tighter credit conditions.
Amid fears an additional half a million US mortgage holders now risk losing their homes, President Bush is expected to unveil plans designed to tackle the problem by freezing interest rates for eligible subprime borrowers over the next five years.
It is understood the assistance will be targeted at those on adjustable-rate mortgages, whose current interest rate is set to be upped from an initial teaser rate.
Other proposals may also be outlined to assist those moving from cheap opening home-loan rates to higher payments.
The plans apparently stem from negotiations US treasury secretary Henry Paulson has been involved in with US mortgage lenders.
White House officials have confirmed President Bush will make a statement this afternoon, with reports suggesting he will confirm the support for subprime borrowers during a wider speech on housing.