Hundreds of thousands of borrowers will be denied the full benefit of yesterday’s cut in interest rates because many banks are refusing to pass on the whole one-point cut to all mortgage customers.

Britain’s biggest mortgage bank, which received billions of pounds in taxpayers’ money, failed to respond in full to the latest move by the Bank of England. Halifax cut its standard variable rate (SVR) by only 0.25 percentage points, while Nationwide will trim its rate by 0.69 points.

A borrower with a £150,000 loan paying Halifax’s SVR will see payments drop by only £25 a month.

Only Lloyds TSB, HSBC and Woolwich said that they would cut their SVR by one percentage point. However, HSBC and Woolwich failed to pass on last month’s 1.5 percentage point cut.

About four million borrowers on tracker rate deals will see their monthly repayments fall by hundreds of pounds after yesterday’s aggressive rate cut. But tens of thousands of borrowers have been forced to move to their lenders’ SVR this year as the credit crunch pushed up the cost of other fixed-rate home loans.

There was relief also for 800,000 borrowers on tracker-rate deals with Halifax and Nationwide, which have backed down on plans to freeze those rates once the base rate moved below 3 per cent. Halifax’s climbdown will save a borrower with a £150,000 repayment mortgage pegged at one percentage point above the base rate about £80 a month, or nearly £1,000 a year.

But thousands of tracker customers at Skipton and Yorkshire building societies will not be so lucky; those lenders are about to enforce a similar rate freeze.

Many lenders came under criticism for dragging their heels or not passing on the cut in full. Halifax and Nationwide refused to pass on the full base-rate cut to borrowers on their SVRs despite pleas from the Government.

This came as figures showed house prices fell at a record rate last month, knocking £140 a day off the value of an average home and plunging 200,000 owners into negative equity.

Values tumbled by 16.1 per cent in the year to November, figures from Halifax show. That is the biggest fall since the series began in 1983 and suggests that the average value of a home is down by about £32,000, to £163,605.

There was also increasing alarm as lenders rushed to withdraw their cheapest tracker-rate deals for buyers. HBOS and Lloyds TSB, Abbey and Alliance & Leicester all stopped offering all tracker loans last night. Brokers said that they would probably launch new, more expensive deals.

Experts criticised Halifax for failing to lead the way on cutting SVRs. Melanie Bien, of Savills Private Finance, a mortgage broker, said: “If lenders that have benefited from the government bailout don’t pass on the cut in borrowing costs, other smaller lenders might see it as an excuse to follow suit, so that hundreds of thousands borrowers will lose out.”

Michael Saunders, chief economist at Citigroup, said the 18 per cent fall in property prices since the market peaked in summer last year has already plunged 800,000 homeowners into negative equity, with 200,000 seeing the value of their home fall below the value of their mortgage in the past month alone.

He forecast that about one in four owners could be in negative equity if prices fall by a total of 30 per cent, as is widely expected.

Surveyors are taking a scythe to values because they are afraid banks could sue them for overvaluing if a property is repossessed and sold for significantly less than their valuation. Peter Bolton-King, chief executive of the National Association of Estate Agents, said: “Valuers got caught out in the last housing slump in the early Nineties when lenders tried to sue them. Now, they are erring on the side of caution.”

Hopes that the Government’s scheme to offer payment holidays to borrowers struggling to meet their mortgage payments could help to slow the rapid decline in house prices by curbing the number of repossessions were dashed as it emerged that the plan may help only about 9,000 homeowners. Ed Stansfield, of Capital Economics, said: “The move is too small to make much of a difference.”

Then and now

1951

- Guy Burgess and Donald Maclean, who spent years passing information from MI6 and the Foreign Office to Russia, flee to Moscow

- A new Morris Minor costs £426

- Tickets for The Lavender Hill Mob, one of the year’s top films, cost about 6d (2=p)

- Motorists pay 3s 1= for a gallon (3.4p a litre) of fuel

- A literary classic is born with the publication of J. D. Salinger’s A Catcher in the Rye

2008

- Daniel James, an Iranian-born translator in the British Army, is sentenced to ten years for passing information to Iran

- A Mini Cooper costs £14,000

- Tickets for the Brit flick Angus, Thongs and Perfect Snogging cost about £5.20

- Drivers filling up yesterday paid about 91p per litre (£4.31 a gallon)

- A classic comes to an end with the publication of J. K. Rowling’s The Tales of Beedle the Bard, a postscript to the Harry Potter series

Source: Times archive; AA

Highs and lows

- Bank rate last fell to 2 per cent in 1939, where it remained until 1951

- The only other time it has fallen by more than a half in less than two months was in Victoria’s reign: from 8 per cent in December 1857 to 3 per cent in February 1858 after banks in the US failed

- The rate soared to a high of 17 per cent in November 1979, where it stayed until July 1980 as the Chancellor, Geoffrey Howe, battled soaring inflation

- The rate has never dipped below 2 per cent in the history of British monetary policy, but has been cut to this about 20 times since 1694

Source: Times archives

Money Central: The five craziest mortgage deals of all time