Britain's biggest mortgage lenders have ignored calls from the Government to pass on yesterday's cut in interest rates to struggling homeowners.

Only Lloyds TSB, the bank which is accepting around £5.5 billion in taxpayers cash to shore up its balance sheet, and Abbey, the UK's second biggest lender, have promised to pass on the historic 1.5 percentage point reduction to borrowers on variable rate deals.

At midday, the Bank of England announced that the cost of borrowing would fall by 1.5 points to 3 per cent in an effort to shore up the economy and stave off a deep recession. The surprise cut took the base rate to its lowest level in more than half a century.

In a statement accompanying the announcement, the Bank's Monetary Policy Committee said: "There has been a very marked deterioration in the outlook for economic activity at home and abroad."

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.”

However, no other lenders have committed to cutting their standard variable rates (SVR). 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 and Nationwide, the biggest building society have said their SVRs remain under review and insiders predict that they may not make an announcement today.

Instead of passing on the cut to homeowners, lenders have been scrambling to prevent hard-pressed borrowers from taking advantage of today's announcement by pulling existing tracker deals that are pegged to the base rate.

Halifax has been withdrawn all its tracker deals this evening. Abbey withdrew its entire tracker range just two days after raising rates, while Woolwich, owned by Barclays, was been forced to make changes to its entire range of trackers for the second time in a single day, blaming the "unprecedented base rate announcement". This morning it raised the rates on its trackers, but this afternoon was forced to pull the range completely.

Nationwide, Northern Rock, the state-owned lender, Alliance & Leicester and a host of building societies have also withdrawn tracker deals today. According to Moneyfacts.co.uk, the financial website, 24 lenders have now withdrawn all their tracker mortgages from the market.

On Tuesday, Lord Mandelson, the Business Secretary, strongly rebuked British banks for their failure to help customers by passing on lower interest rates.

But Michael Coogan, director general of the Council of Mortgage Lenders, said: “What is important is how this feeds through to lenders’ borrowing costs - and lenders will need to balance the interests of savers, as well - but such a sharp downward movement provides more room for lower borrowing costs more quickly."

Less than half of lenders passed on last month's half-point cut in interest rates in full. But more than 4 million homeowners on existing tracker mortgages will benefit immediately because their deals are directly linked to the base rate. A household with a £150,000 loan will save almost £120 month on the cost of their mortgage repayments.

About 800,000 homeowners are on their lender's standard variable rate (SVR), or discounted deal which is pegged to it.

Lloyds TSB 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.

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."

Mortgage brokers have also given warning that thousands of borrowers may not benefit from future cuts in the base rate because many lenders have a "collar" which stops tracker rates falling below a certain level.

Halifax, which is set to be taken over by Lloyds TSB, has a rule which allows it to stop passing on reductions in the base rate to borrowers on a tracker deal when it falls below 3 per cent. Nationwide Building Society will also refuse to pass on any decreases if the base rate sinks lower than 2.75 per cent.

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