US Senate approves housing bill

More than a million people have lost their homes in the US housing crisis

The US Senate has approved a rescue bill designed to prop up America's battered housing market.

The new law creates a $300bn (£150bn) rescue fund to help thousands of homeowners get cheaper loans.

It may also be used to bail out the struggling mortgage giants Freddie Mac and Fannie Mae, which own or guarantee around half the nation's mortgage debt.

The bill has been approved in a very short time. President George W Bush is expected to sign it into law next week.

The BBC's Jack Izzard in Washington says the bill will help hundreds of thousands of Americans trapped by mortgages they can no longer afford.

They will be offered the chance to refinance with state-backed, fixed rate loans.

Boom and bust

The housing crisis is causing serious problems for the wider US economy.

Almost 740,000 US homes entered the foreclosure process in the second quarter of 2008, according to research firm RealtyTrac.

The worst-hit areas were Nevada, California, Florida and Arizona, which had seen the biggest house price rises during the boom years, and the largest volume of sub-prime lending.

The bill's Republican critics say it will cost US taxpayers billions, and query the wisdom of bailing out irresponsible homeowners or unscrupulous lenders.

President Bush had initially threatened to veto the bill over a provision for $3.9bn (£1.95bn) in community grants to buy up and repair repossessed homes.