Countrywide Financial, the biggest US mortgage lender, on Tuesday said it would give new cheaper home loans to borrowers in $16bn of subprime mortgages facing interest rate resets before the end of 2008.

The new scheme comes as the number of homes foreclosed on and held for sale at Countrywide has climbed steadily higher. Rising default rates on US home loans have sparked intense political and regulatory pressure on the mortgage industry to help homeowners avoid foreclosure.