US President George W. Bush yesterday formally unveiled a plan to freeze interest rates on some subprime home loans for five years, setting up potential showdowns with mortgage security investors who could see their returns decline and Democrats who say the plan does not go far enough to help troubled homeowners.

The plan, negotiated over a series of meetings with industry executives, is intended to forestall a wave of foreclosures over the next two years as nearly $400bn worth of home loans made to risky subprime borrowers reset at higher interest rates.