Lenders are likely to pocket £1.5 billion over the next few years by failing to pass on interest-rate cuts, despite ministers’ attempts to kickstart lending.

The government, which will hold a 45% stake in the market after the part-nationalisation of Halifax Bank of Scotland (HBOS), Lloyds TSB and Royal Bank of Scotland (RBS), said last week that it wanted the banks to take lending back to 2007 levels in return for £37 billion of taxpayers’ cash.

However, lenders show every sign of ignoring this. Lloyds TSB, which has asked for £5.5 billion, admitted launching a crackdown on new mortgages through its Cheltenham & Gloucester (C&G) arm last week.

Borrowers who were previously turned down simply because of their credit score could now find their employment history or even the number of children they have increasingly counts against them. C&G, which is granting 24% of new mortgages, also raised rates on trackers by up to 0.50 percentage points, although rates in the wholesale markets have eased.

Capital Economics, the consultancy, forecast that if Bank rate is cut to 2.5%, as it expects, mortgage rates for new borrowers will go down to just 4.5%, in line with lenders’ behaviour in previous recessions.

That would make the banks £1.5 billion in excess profits, assuming £93 billion of lending is on variable rates every year and that a typical margin is 0.38 points. The additional cost to borrowers would be an average £2,000 a year.

Northern Rock has given an indication of how lenders will react. The bank, controlled by the government for a year, is under fire from MPs and charities over repossessions and for not passing on most of the Bank of England’s half-point interest-rate cut. It reduced its standard variable rate (SVR) by just 0.15 points, depriving borrowers of £45 a month or £540 a year on a £200,000 loan.

It argued it was obliged to encourage borrowers to move elsewhere as soon as possible, so it can repay the taxpayer. However, most borrowers on its SVR are unable to go elsewhere.

Hamish and Kristy Morton of New Malden, Surrey, took out a two-year fixed-rate loan with Northern Rock at 5.99%. When their deal expires in December, their repayments will rise to 7.34%, adding £254 a month to the cost of the mortgage because repayments will rise from £1,128 to £1,382.

They are unable to switch to another lender as prices in the area have fallen. Their home was recently valued at £18,000 less than when they took out the mortgage — leaving them with just 2% equity.

Hamish, 33, an account administrator, said: “According to our broker there are no mortgages available for us, so we are stuck with these repayments and it won’t be easy with a new baby.”

Adam Sampson, chief executive of the charity Shelter, said: “It is fundamentally flawed that the government is calling on mortgage lenders to pass on the full value of mortgage interest-rate cuts and to exercise their social responsibility when a government-owned business acts in such an aggressive manner.”

John McFall, chairman of the Commons Treasury committee, has urged Northern Rock to offer a better deal for those rolling off fixed rates.

Northern Rock said: “The main priority of our business plan is to repay the government loan, and to achieve that we intend to reduce the asset base by around 50% from the size at the end of 2007. This will be achieved primarily through an active programme of mortgage redemptions.”

Brokers last week called on the government to take the lead on mortgages. Melanie Bien of Savills Private Finance said: “With a 45% stake in the mortgage market, the government may be able to play a part in keeping prices down.”

The cost of variable rate mortgages including trackers and discounts has averaged 0.38 percentage points above Bank rate for the past 15 years, but the margin could soar to 2 points during the oncoming recession, Capital Economics said.

Lenders are expected to hand out about £93 billion in variable-rate loans next year — figures from CACI, the market-information group, show 43% of outstanding loans are now made up of trackers which are linked to Bank rate and deals linked to or equal to the lender’s standard variable rate.

C&G said last week, in a note to brokers titled Lending Policy Clarification, that applications were being declined for“reasons beyond” a borrower’s credit score.

It refused to say precisely which criteria had changed: “We have always been known as a conservative lender, but we’re having to tighten our criteria even further in the current climate.

This can include the level or income, type of income, employment history and number of dependants.”