This means that every cash-strapped homeowner would be able to refinance his mortgage and cut his payments in half, saving thousands of homes from foreclosure.

Many homeowners who were struggling with their loans were using equity from their rising house price to refinance their mortgages.

Separately, up to five million people will be able to refinance their mortgages even if they have little or no equity.

However, many homeowners who refinanced their mortgage when a fixed-rate period came to an end borrowed an even larger sum based on the increase in the value of their property.

By refinancing their mortgages, homeowners could shift non-deductable debt away from credit cards and lines of credit into their house, he said.