Lenders warned homeowners last night that they should not expect cheaper mortgage repayments even if the Bank of England cuts interest rates today.

The Council of Mortgage Lenders (CML), the main lobby group representing banks and building societies, said that its members would not automatically pass a base rate reduction on to customers in the form of cheaper loans. That would appear to put it on a collision course with the Government.

Alistair Darling has said that banks receiving £37 billion of government funds should maintain lending at 2007 levels. However, the CML effectively gave the green light to its members to disregard the Chancellor's request, saying that it did not make commercial sense to insist or expect that lenders automatically would pass on cuts in Bank rate to borrowers.

Yesterday some CML members appeared to be manoeuvring to ensure that their margins increase if the bank cuts rates sharply, as expected, today. Woolwich, the lending arm of Barclays, increased its tracker deals by up to 0.3 percentage points. Lloyds TSB and the state-owned Northern Rock withdrew their tracker deals from the market last night. They are expected to reintroduce them in the coming days.

Melanie Bien, director of Savills Private Finance, the mortgage broker, said: “The Government has been calling on lenders to pass on the cut in interest rates to new borrowers. It seems the Government doesn't have very much influence over the Rock.”

The CML statement, which comes days after HSBC confirmed that it might not pass on a reduction, will disappoint millions of homeowners who have grown used to seeing their variable mortgage repayments fall after cuts in the base rate. About 40 per cent of the UK's 11million mortgages are tracker, or variable-rate, loans.

The CML blamed its members' inability to pass on reduced rateson a “dislocation” between the base rate and the higher interbank borrowing rates that lenders use to price mortgages.