THIS week’s 0.25 percentage point cut in the Bank of England base rate, taking it to 5.2.5 per cent, was good news for borrowers with tracker-rate mortgages, but brought less cheer to certain variable-rate borrowers.

The cut means someone borrowing £100,000 on a tracker charging 5.5 per cent interest would see their mortgage fall by roughly £15 a month from about £614 to £599. Borrowers with tracker mortgages automatically benefit from cuts in the cost of borrowing because their mortgage rate is directly linked to the base rate.

However, those on mortgages that follow their lenders’ standard variable rate (SVR) are reliant on their lender’s generosity to profit from the cut.

After Thursday’s decision, a number of banks, including Halifax, Nationwide, Abbey and Lloyds TSB, immedately dropped their SVRs by the full quarter point. However, the Council of Mortgage Lenders (CML) cautioned borrowers not to automatically expect cheaper deals, saying that the ongoing credit crunch is continuing to have an impact on the pricing of home loans.

Mortgage brokers point out that the credit crunch is making lenders increasingly inclined to hit customers with higher margins than in the past. Ray Boulger, of John Charcol, the broker, says: “The bad news for the UK’s mortgage borrowers is that bank-rate cuts have increasingly less of an influence on their pockets. Around 20 per cent of lenders did not pass on the whole of December’s rate cut and I expect the proportion to be higher this time around.

“We find ourselves in this situation as the difference between the cost to lenders and what they charge the consumer are at the highest they have been for a very long time.”

Experts also gave warning that new borrowers hoping to benefit from the lower base rate could be left disappointed. Jonathan Cornell, managing director at Hamptons International mortgages, says: “In the current climate, where there is a chronic lack of supply of mortgage funding, there is a very real danger that new borrowers will see much less of a cut than many of them were hoping for.”

A number of lenders, including Nationwide, Alliance & Leicester and Halifax, have upped their tracker rates since December’s 0.25 per cent interest rate cut, negating the potential impact of a lower base rate.

The CML’s figures show 20 per cent of outstanding mortgages are standard variable rate or other variable rate loans, while about 50 per cent are on fixed deals (that will not be affected at all by the base rate decision).

Brokers suggest that borrowerrs on their bank’s standard variable rates should find a new mortgage irrespective of whether their lender passes on lower borrowing costs.

David Hollingworth, of London and Country Mortgages, says: “Some of those currently on SVR just don’t need to be paying it, and should start looking for a better, cheaper deal, either with their existing lender or elsewhere.”

Shopping around is the only way to get the best of the available deals and pay less than you might otherwise for your mortgage. Mr Hollingworth favours Cooperative Bank’s tracker deal at 0.01 below base rate and a £999 fee.

For those new borrowers looking for fixed deals, First Direct features among the best rates, at 4.75 per cent on a two-year offer, though customers will have to pay an arrangement fee of £1,498.