One of Britain’s biggest lenders withdrew some of its most popular mortgage deals last night after the Bank of England cut its base rate.

The move dashed the hopes of first-time buyers and hard-pressed homeowners who had hoped that the Chancellor’s bank bailout would signal an era of cheaper and easier borrowing.

Cheltenham & Gloucester, the home-loans arm of Lloyds TSB, promptly withdrew some competitive “tracker” deals linked to the base rate. Nationwide, the biggest building society, and Abbey, the second-largest mortgage lender, are understood to be planning similar moves.

All of these institutions could benefit from the Government’s £500 billion injection of cash into the banking industry, which was made on the understanding that mortgage finance should become more easily available after months of tightening purse strings.

Millions of homeowners will have been cheered by the Bank’s dramatic move yesterday, which will save them hundreds of pounds a year. About 4.7 million borrowers who are on existing tracker deals or paying their lender’s standard variable rate (SVR) should see their mortgage bills cut. The Halifax, Woolwich and RBS all announced that they would be reducing their SVRs. And a borrower with an existing £200,000 tracker deal should save £700 a year.

Cheltenham & Gloucester’s decision will come as a blow to first-time buyers — essential for the health of the housing market — hoping for a tracker mortgage. These loans have gained in popularity amid expectations that the Bank of England will reduce rates. Some economists are predicting that the base rate could fall from 4.5 per cent to as low as 2.5 per cent in the next 12 months.

C&G said it was acting to “manage demand” as it had received a surge in applications. Now only those with substantial deposits will be able to take advantage of its tracker deals.

David Hollingworth, of the broker L&C Mortgages, said: “Lenders have been increasing tracker rates to improve their profit margins.” He thinks that this may continue until the banks grow more confident about lending to each other.

Fixed-rate loans — the favourite option for Britain’s 11 million homebuyers — could become cheaper, however, in the next few weeks. Lulu Egerton, of the estate agent Strutt & Parker, described the base-rate cut as “a show of commitment towards assisting the battered property market”. But other observers suspect that the lenders will restrict the supply of affordable loans, despite the Chancellor’s request that institutions receiving taxpayers’ money should “ensure that the banking system has the funds necessary to maintain lending in the medium term”.

James Purnell, the Work and Pensions Secretary, will reiterate plans at a Jobcentre Plus conference today for the recently unemployed to have the interest paid on their mortgages. Under the present Income Support for Mortgage Interest scheme, the value of homes eligible is £100,000. This will be increased to £175,000. The waiting period for the scheme will also be decreased from 39 to 12 weeks.

“People need to know that there is financial help and support out there if they lose their jobs,” he will say.

The changes are expected to prevent more than 10,000 repossessions.