Congressional efforts to tackle the US housing crisis with new legislation were bolstered on Monday when a bipartisan agreement was reached in the Senate on the terms of the intervention.

After weeks of wrangling, Chris Dodd and Richard Shelby, the senior Democratic and Republican lawmakers on the Senate banking committee, said they had struck a deal on a bill that would allow the US government to guarantee the refinancing of up to $300bn (€192bn, £153bn) in mortgages at more affordable levels for about 500,000 people.