Federal regulators and lenders are homing in on five years as the length of an interest-rate freeze on subprime mortgages, Bloomberg reported, citing a source familiar with the negotiations.

Treasury Secretary Henry Paulson has said he hoped a plan would be ready by week's end.

Two people familiar with the talks told Bloomberg that President George W. Bush and Paulson may announce a plan December 6.

More than 2 million subprime borrowers took out mortgages with low teaser interest rates which are due to reset sharply higher, and officials fear as many as 500,000 could lose their homes because they're unable to make the higher payments.

Rising defaults on U.S. subprime mortgages -- which were repackaged as securities and sold worldwide -- have rattled financial markets in recent months, drying up credit and putting the world's largest economy at risk.

(Editing by Erica Billingham)

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