Halifax, the country's biggest mortgage lender, will make cuts of up to 0.3 percentage points on 16 of its home loan products today and Bank of Scotland (BoS), its sister company, is reducing rates on 29 products by up to 0.45 points.

The latest cuts are the third this month and the ninth since the start of the year. A spokesman for Halifax and BoS said that the reductions were a response to the recent spate of rate cuts by other lenders.

Most of the Halifax changes are in its tracker rates and three and five-year fixed rates, which are being cut by up to 0.18 points. Most of its two-year fixed rates were changed last weekend, although Halifax is now cutting the rate on its two-year fix for large loans of more than £500,000 by 0.3 percentage points.

The BoS reductions are concentrated entirely on its large loans. Its two-year fix for customers borrowing more than £500,000 comes down by 0.45 points to 6.64 per cent.

Meanwhile, National Australia Bank (NAB), which was reported to be part of a consortium planning a bid for HBOS, said it was not in a position to make acquisitions after taking a A$830 million (£399 million) hit on its sub-prime investments.

JPMorgan reportedly approached Nab and unnamed private equity firms to form a group to break up HBOS, which last week raised £4 billion from shareholders to plump its capital cushion.

Santander, the Spanish bank buying Alliance & Leicester (A&L), may also be asked to take part in a bid, it was reported.

NAB revealed an $830 million writedown on its portfolio of collateralised debt obligations (CDOs) on top of a $181 million charge in March. The bank has now made provisions against almost 90 per cent of its CDO portfolio.

John Stewart, the NAB chief executive, said: “We are not sure this is a clever time to make acquisitions.”

HBOS is not thought to have received an approach from potential bidders. Shares in the bank fell by almost 4 per cent in morning trading before closing up 2.9 per cent at 310.25p.

Sources with knowledge of the banks dismissed speculation about takeover talks as "rubbish". Another banker described a bid as "unlikely and implausible".

NAB has owned the Yorkshire and Clydesdale banks since 1987. Unlike most rivals, the banks did not make losses in the credit crunch and NAB could be interested in expanding them through acquisition.