What has happened today?

The Bank of England's Monetary Policy Committee has voted to cut the base rate a quarter point from 5.75 per cent to 5.5 per cent. The change will bring relief to millions of homeowners but savers may be left disappointed.

I have a tracker mortgage, what does this mean for me?

After five interest rate rises since August 2006, those with a tracker loan will finally receive a cut in their interest rate of a quarter of a percentage point. This will happen automatically from today.

As an example, a borrower with a £150,000 interest-only mortgage whose monthly repayments have been £718.75 a month since August will now pay £687.50 – a monthly saving of £31.25

What about borrowers who pay their lender's standard variable rate (SVR)?

It all depends on whether lenders decide to pass on the rate cut – and for those who are not on tracker mortgages they are under no obligation to do so.

Halifax , the UK's biggest mortgage lender, today said it will cut its SVR from 7.75 per cent to 7.50 per cent. The decrease for existing borrowers will come into effect on 1st January 2008. Nationwide, the second-biggest lender, also said it will decrease its Base Mortgage Rate (BMR) by 0.25 per cent from 7.24 per cent to 6.99 per cent from January 1.

While most lenders tend to follow the example set by the biggest high street banks, some may leave their SVRs at current levels. This is because banks and building societies are facing soaring borrowing costs as a result of the global credit freeze, which has arisen out of the collapse of the US sub-prime mortgage market.

Lenders will advise borrowers of any changes in the coming weeks.

What will the rate cut mean for savers?

Those who have savings in a base rate tracker account will suffer an immediate cut in their account following today's rate cut.

However, those whose rate is at the discretion of their bank or building society, may find they are spared this time. This is because banks are looking to attract savers deposits as part of a strategy to minimise their reliance on the increasingly expensive money markets. So banks may be more inclined to absorb the rate cut and spare savers.

On the other hand, banks who are not looking to attract savers may use the opportunity to cut their rate by a quarter point - or more.

While Halifax and Nationwide have announced they will cut the SVR for borrowers, they are yet to reveal what will happen for savers. However National Savings & Investments, the Government-backed savings institution, today said it will immediately cut the interest rate on its Direct ISA to 6.05 per cent from 6.30 per cent per annum following the cut in the Bank of England base rate.

What will this mean for my credit card repayments?

Those who have a credit card are utterly at the mercy of their bank.

If the bank chooses to pass on the base rate cut, you could find your credit card bills fall. However, this is highly unlikely. The more likely scenario is that there will no such present in your Christmas stocking.

The best way to protect yourself is to pay your off your balance in full each month, and avoid interest charges altogether.

Will there be further interest rate cuts?

Economists have said it is highly likely that today's cut will be followed by another reduction early next year. However, as with today's cut, there are no certainties when it comes to relief for homeowners. Mortgage lenders have said clearly that they are under pressure. Borrowers who were awarded a cut in rates today may find they miss out next time.

Explore Economics

• Pre-Budget Report 2008

• Budget 2009

• World Economic Forum

• The Times MPC

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