Millions of homeowners will make substantial monthly savings following the cut of 0.5 percentage points to interest rates announced by the Bank of England today.

A third of borrowers - approximately 4 million people - with home loans that track the Bank's base rate will benefit immediately. Those with a £150,000 mortgage will see their interest-only repayments fall by £63 a month.

Halifax and Bank of Scotland, owned by HBOS, Lloyds TSB and Woolwich, the mortgage arm of Barclays, have also announced that they will pass on the full rate cut to homeowners who are on their standard variable rates. The new rates will come into force on November 1.

Borrowers with other lenders will have to wait to find out whether they will benefit. Abbey and Nationwide Building Society have said they are reviewing market conditions before making a decison.

About 5 per cent of borrowers are on a standard variable rate while another 7 per cent are on mortgages which are based on the standard variable rate.

David Hollingworth, of L&C Mortgages, a broker, said: "Once the big lenders begin to move it is likely that other banks and building societies will follow suit. However, there is no guarantee that all lenders will pass on the full half-point cut."

The Bank of England's Monetary Policy Committee cut the base rate from 5 per cent to 4.5 per cent a day earlier than expected as part of a co-ordinated move with central banks around the world to shore up global financial markets.

One in ten lenders did not pass on April's interest rate cut in full, and experts fear that even more lenders could decide not to reduce standard variable rates this time around.

Ray Boulger, of John Charcol, the mortgage broker, said: "A lot of lenders will not pass the base rate cut to borrowers because of the conditions in the interbank money markets, which dictate the cost of mortgage rates."

However, other experts hope that the cut in the base rate, combined with the Government's £50 billion bail-out plan for Britain's biggest banks announced earlier, will ease conditions on the money markets. This should result in a fall in the cost of new fixed rate deals.

Two-year swap rates, the money markets which banks use to fund fixed rate mortgage lending, have fallen by two-thirds of a point in the last two weeks. However three-month Libor, which reflects the cost of borrowing overnight for banks, has remained very high.

Melanie Bien, director of Savills Private Finance, the broker, said: "The move by the Bank of England should push swap rates down further which should mean cheaper fixed rates - these are now so expensive compared to base rate that they will be highly unattractive.”

HBOS and Lloyds TSB have promised all existing borrowers that their standard variable rates would never be more than 2 points above the base rate. This means the lenders had little choice but to announce a cut in rates almost immediately.

Peter Rollings, managing director of estate agent Marsh & Parsons, said: "Other lenders must pass on this base rate cut to borrowers. Together with the liquidity measures announced this morning, there is some light at the end of the tunnel for borrowers."

Experts predict that the half-point cut today could be the first in a series of base rate cuts by the Bank of England which could see interest rates fall to 2.5 per cent by the third quarter of next year, spelling good news for homeowners on tracker mortgage deals.

Jonathan Loynes, an economist at Capital Economics, said: “Interest rates have certainly got a long way to fall.”

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