Lloyds TSB, the UK's fifth biggest lender, has committed to passing on the full one and a half point cut in interest rates to homeowners on a variable rate deal.

A household with a £150,000 loan will save £187.5 a month on the cost of their interest-only mortgage repayments after the cut in rates.

About 4.2 million homeowners on tracker mortgages which are pegged to the base rate will benefit immediately from the 1.5 percentage point cut in the base rate announced today.

Another 800,000 homeowners are on their lenders standard variable rate (SVR), or discounted deal which is pegged to it. Lloyds TSB is the only bank to so far confirm it is passing on the cut to borrwers with SVRs.

The bank is reducing its SVR to 5 per cent because of a clause in its mortgage contracts promising that its variable rate will never be more than 2 percentage points above base. Halifax, the UK's biggest lender, recently scrapped a similar clause in its mortgage contracts and says its SVR is still under review.

Lloyds TSB is set to be part-nationalised after agreeing to take around £5.5 billion in Government cash as part of a bail-out of the banking system. Other banks which are taking billions of pounds in Government support include HBOS, which owns Halifax, and Royal Bank of Scotland.

Customers with loans from other banks will have to wait to find out whether their lender will pass on the unexpectedly large reduction. Less than half of lenders passed on last month's half-point cut in interest rates.

Yvette Cooper, Chief Secretary to the Treasury, has called on lenders to cut interest rates in line with Bank of England. Ms Cooper said: "The Government has stepped in to make the banking system safe, to support the banks. It is right now that the banks do their bit to support everybody else.”

HSBC, the biggest bank in the UK, said that its SVR was under review and that it may not announce whether it is passing on the 1.5 percentage point cut until next week. On Monday, a senior executive at HSBC warned that borrowers on its variable rates were unlikely to benefit from the full cut in interest rates.

Other lenders, including Royal Bank of Scotland, Nationwide, the biggest building society, and Abbey, the UK's second biggest lender, have said their SVRs remain under review.

Melanie Bien, of Savills Private Finance, a broker, said: "Lenders are really going to struggle to pass on the full cut. No one expected the base rate to be cut this far. It should have a massive effect on the mortgage market. This is a historic, dramatic reduction."

Meanwhile, the Council of Mortgage Lenders (CML), the industry body representing banks and building societies, yesterday gave warning that its members would not automatically pass a base rate reduction on to new customers in the form of cheaper loans.