Mortgage lenders follow Bank of England's lead by cutting interest rates

Within hours of the Bank's announcement at noon, nine of the top ten lenders said they would pass the full quarter-point cut to their borrowers.

Only the stricken Northern Rock did not move its rates following the decision to bring down rates from 5.5 per cent to 5.25 per cent.

The "rush to cut" follows criticism of banks and building societies for ripping off mortgage holders after the last rate reduction just before Christmas.

About 20 per cent of lenders did not pass on the whole of the December decrease to hard-pressed borrowers.

Ray Boulger, a mortgage expert from brokers John Charcol, said: "They have rushed to deflect any criticism."

On an average mortgage of £150,000, the rate cut will reduce monthly repayments by about £24.

But experts warned that lower mortgage rates will be wiped out by inflationbusting increases in other household bills, particularly for energy.

Yesterday E.ON, formerly known as Powergen, became the fifth of the "big six" energy giants to raise its prices in the depths of winter.

In a further blow, the Bank of England warned that it expects prices to keep on rising, "possibly quite sharply".

Mike Naylor of the comparison website uSwitch.com said: "The rate cut could still be too little, too late, for some.

"People are currently paying out 35 per cent of their take-home pay on mortgage repayments, and ten million consumers already feel that their current level of overall debt is unmanageable."

Repossession figures, due to be published today, are likely to show how soaring bills are helping to push many people over the edge.

The figures are expected to show about 30,000 had their homes repossessed last year, the highest number since 1999.

Yesterday's rate cut will help only the minority of borrowers, roughly one in five, who have a mortgage with a variable interest rate.

About 50 per cent of homeowners have a fixed-rate loan which will not be affected.

The biggest losers will be those who have recently fixed their mortgage at 5.5 per cent or higher.

Yesterday's widely expected rate cut will also hit savers, who outnumber borrowers by about eight to one.

Banks and building societies have been punishing savers since the rate cut before Christmas, and are likely to do the same again.

In December, the base rate fell 0.25 percentage points, but the rate on many of the saving giants' accounts was slashed 0.6 percentage points.

Yesterday economists said they expect interest rates to keep falling, possibly as low as four per cent by early next year.

The latest reduction comes amid mounting evidence that the housing market is collapsing, with prices falling across the country.

Roger Bootle, economic adviser to the accountants Deloitte, warned: "The current housing market adjustment is shaping up to be the big one."