HSBC, Britain's biggest bank, is not passing on the full Bank of England base rate cut to borrowers on its variable rate deals.

The decision by the UK's tenth biggest lender came as it emerged that it is now almost impossible for first-time buyers to find a mortgage that tracks the Bank of Enlgand base rate.

HSBC has announced that it is reducing its standard variable rate (SVR) by 0.81 percentage points from December 5, lowering it from 6.25 per cent to 5.44 per cent. First Direct, the online-only bank owned by HSBC, will also cut its SVR by 0.81 per cent, to 4.69 per cent.

HSBC is the only major bank not to pass on the full 1.5 percentage point cut in interest rates.

A number of building societies, including Britannia, the second biggest mutual, have been criticised for only passing on part of the cut to customers. Most building societies are yet to announce whether variable-rate customers will benefit.

About 10 per cent of homeowners are on variable-rate deals, according the Council of Mortgage Lenders.

In the days immediately after the Bank of England's base rate cut, the Government put lenders under enormous pressure to reduce interest rates. Halifax, Britain's biggest lender, Lloyds TSB and Royal Bank of Scotland, which are taking billions of pounds of taxpayer's cash as part of the Government's £37 billion bail-out of the banking system, announced that they would pass on the full 1.5 cut immediately.

Andrew Montlake, of Cobalt Capital, a broker, said: "It is disappointing that HSBC has only decided to pass on just over half of the latest base rate cut, and taken an age to come to this decision as well. HSBC has some attractive deals at the moment, but this half-hearted move suggests that it is unlikely they will pass on future cuts."

Meanwhile, it emerged today that borrowers with a smaller deposit are unable to find a new mortgage deal that tracks the base rate.

Lenders have effectively shut the door on first-time buyers and homeowners with a small deposit, ruling out the possibility of new tracker deals for anyone without a 25 per cent deposit.

Tracker mortgages have been popular amongst homeowners in recent months because the Bank of England is widely expected to make further reductions to the base rate, cutting the cost of repayments for homeowners on tracker deals.

Halifax, Lloyds TSB, Abbey and Alliance & Leicester have all introduced new trackers with a maximum loan-to-value ratio of 75 per cent. HSBC continues to offer the best value tracker, with a rate of 0.99 percentage points above base, or 3.99 per cent. However it is only available to customers with a 40 per cent deposit.

The number of deals on the market for borrowers with a 10 per cent deposit has fallen to 167, compared with almost 600 in July.

Michelle Slade, of Moneyfacts.co.uk, the financial website, said: “The Bank of England has hinted at further rate cuts, but only customers with at least a 25 per cent deposit can really take advantage as lenders are only bringing a small selection of deals back for the less risky customers.

“Lenders are in no hurry to return their tracker mortgages to the market, even though there is an increased demand for these types of deals. It appears that despite being urged to do so by the Government, they have still not regained their appetite to lend.

Some banks have also been adding to the woes of first-time buyers by increasing interest rates on fixed-rate deals for borrowers with a 10 per cent deposit, at a time when rates are falling in the rest of the market.

This week HSBC pushed up the rates on its fixed-rate deals for borrowers with a small deposit by almost half a point. A two-year fix worth up to 90 per cent of a property's value now carries a rate of 6.99 per cent, up from 6.44 per cent. In the same week, Northern Rock launched a new one-year fix with a rate of 3.99 per cent.

Lenders have been able to cut interest rates on fixed-rate deals because of a downward slide in cost of wholesale borrowing on interbank money markets. One and two-year swaps, which banks use to fund fixed-rate lending, are at their lowest point in more than five years.

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