US Treasury Secretary Henry Paulson is poised to unveil a plan in the next few days to curb further deterioration in the US sub-prime mortgage market with measures that could include freezing the interest payments on loans to borrowers facing default.

The Treasury is negotiating with lenders to fix interest rates on some mortgages to prevent a further surge in defaults as borrowing costs on loans originated in 2006 are to rise as a result of interest rates resetting from the initial "low teaser rates".