Hope for homeowners: Bank of England is expected to cut interest rates this week

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The Bank of England is expected to cut interest rates this week, bringing some much-needed relief to hard-up homeowners.

The base rate is tipped to come down by a quarter of a point to 5 per cent on Thursday as governor Mervyn King attempts to kickstart a faltering economy.

A quarter point reduction in borrowing costs would cut the monthly repayments on an average £150,000 mortgage by just over £31.

If Mr King does decide to lower rates for the third time since December, it would ease pressure on millions of homeowners in the grip of spiralling food and fuel bills.

However, experts question whether mortgage lenders will pass on any rate cuts to customers.

The credit crunch has pushed up borrowing costs for banks, who have hiked their mortgage rates to protect their profits.

The cuts are a measure of Mr King's increasing desperation as he tries to steer the UK through the worst financial crisis in decades.

But some former Monetary Policy Committee colleagues fear it will not be enough.

DeAnne Julius, who served alongside Mr King on the MPC, has warned only a half-point cut stands any chance of restoring order to battered credit markets.