REPORT OF MORTGAGE RATE FREEZE BOOST US BOND INSURERS

Shares of US bond insurers jumped at the weekend on a report that the Bush administration is close to reaching a deal with the mortgage industry to freeze low rates on certain subprime mortgages and help reduce losses from the ongoing subprime and real estate crisis. The Wall Street Journal reported that the freeze could be imposed for up to seven years. It would apply to those subprime mortgages that are about to be re-set at higher levels in coming months. With prospects for a slow-down in loan defaults, Ambac shares gained 16.3% in value on Friday, while MBIA’s shares rose 18.8%, PMI Group added 13.6%, Radian Group increased 12.4%, MGIC Investment jumped 8.9% and Security Capital Assurance rose 3.2%.