Nationwide has scrapped its mortgages for borrowers smaller deposits and hiked rates on its tracker deals following the Bank of England's base rate cut last week.

Britain's biggest building society has pulled all its mortgages, sold though brokers, for borrowers with a 10 per cent deposit.The lender has replaced its 90 per cent loan-to-value (LTV) deals with products which require a 15 per cent deposit.

Only one three-year deal is now available up to 90 per cent of a property's value and it is being sold solely through its branches.

It also increased the margins on its tracker products, which are pegged to the base rate, by up to 0.61 percentage points. It said the moves were designed to "maintain control of the volume of business the society is attracting, and continue lending in a prudent and responsible way.”

A two-year tracker deal for a homeowner looking to remortgage is now available at 1.54 points above base, compared to 0.93 above base previously.

The rate changes were announced as Nationwide also confirmed that it had agreed to increase its capital base by £500 million following the Government's £37 billion plan to "recapitalise" HBOS, Lloyds TSB and Royal Bank of Scotland, effectively part-nationalising the three lenders. Nationwide said it would raise the extra funding through market channels, rather than from the Government.

Other lenders have attracted criticism for failing to pass on last week's half-point cut in the base rate in full. This morning Northern Rock said that it was reducing its standard variable rate (SVR) by only 0.15 percentage points to 7.34 per cent. Its SVR remains one of the highest of the high street lenders.

David Hollingworth, of L&C Mortgages, the broker, said: "Northern Rock borrowers with very little or no equity effectively have nowhere else to go. Failing to pass on the full base rate cut will hit those borrowers that need the cut the most."

Last Wednesday, the Bank of England made a half-point cut to the base rate in co-ordination with other central banks around the world in order to stabilise stock markets.

Halifax, the UK's biggest lender, Bank of Scotland, Chelthenham & Gloucester, the lending arm of Lloyds TSB, Woolwich, owned by Barclays, and the Royal Bank of Scotland (RBS) Group all cut SVRs by the full 0.5 percentage points last week.

Other lenders including Nationwide, Abbey HSBC and Britannia are yet to make an announcement on whether they intend to pass on the cut.

Melanie Bien, director of Savills Private Finance, the broker, said: "Larger lenders will have to pass on the full cut but the smaller ones might use the opportunity to pass on less to boost profit margins. Building societies moved quickly after the last two rate reductions, so I am surprised that they are being so tardy, particularly as the Financial Services Authority will be paying close attention to what lenders do."

Around 5 million homeowners are on variable rate mortgage deals. There are 800,000 borrowers who are on their lenders SVR.

The 4.2 million who are on tracker mortgages, which are pegged to the base rate, benefitted immediately from the Bank of England's reduction. A homeowner with a £150,000 mortgage will save £63 a month in repayment costs.

However, tracker rates have increased for new customers. RBS has relaunched its two-year tracker deals at 2.34 per cent above the base rate, a pay rate of 6.84 per cent. The deals had previously been 1.34 above the official rate. It follows a similar move by Abbey, Britain’s second biggest lender, which increased the rates on all its new base-rate tracker deals by half a point, cancelling out the benefit of the Bank of England’s base rate reduction.

Banks and building societies, including Halifax, Britain’s biggest lender, have pulled over a quarter of all base-rate linked deals since Wednesday’s cut.

Ray Bougler, of John Charcol, the mortgage broker, said: “Lenders will continue to cut tracker deals and increase rates in an effort to protect profit margins.”