Homeowners with a tracker deal from Nationwide had a disappointing start to the new year after the building society said that it would not pass on any further cuts to the Bank of England base rate.

Nationwide has effectively introduced a threshold, or collar, that prevents tracker rates from falling if the base rate drops below the current level of 2 per cent. The Bank of England meets next week to decide whether to cut the cost of borrowing further.

About 200,000 Nationwide customers have mortgages with rates pegged to the base rate. A cut of one percentage point would have brought a £125-a-month saving for borrowers on a £150,000 interest-only tracker deal. However, the society has promised to pass on any future cuts to customers on its standard variable rate, currently 4 per cent.

Nationwide says that the move is designed to protect savers. However, it failed to guarantee that savings rates will not be reduced if the Bank does lower the base rate next week. This week Nationwide cut its savings rates by up to 1.1 percentage points.

Most large lenders, including Lloyds TSB, HSBC, Northern Rock and Barclays, do not have collars on their tracker mortgages.

Despite Nationwide's move, interest rates have fallen so far in recent months that borrowers on higher-rate fixes could save hundreds of pounds by switching, even when the penalty charge is taken into account.

Lenders typically charge a hefty fee, known as an early redemption charge (ERC), for remortgaging before a deal expires. However, millions of homeowners locked into fixed-rate mortgages with months or even years before the term expires should still consider switching.

Many lenders have pushed up rates on tracker deals or pulled them from the market completely in recent months, but there are still a small number of attractive home loans pegged to the base rate. But you will need at least 20 per cent equity in your property to take advantage of these deals.

Darren Cook, of the financial website Moneyfacts.co.uk, says: “It could be feasible to pay the ERC and find a cheaper tracker or fixed-rate deal to help you to weather the financial storm over the next few years. But the sums need to be scrutinised closely to try to determine whether a reduction in monthly repayments will make a switch worthwhile.”

ERCs range between 1 per cent and 6 per cent of your total loan, yet some homeowners on fixed rates could still save hundreds of pounds.

For example, at the start of 2008 Halifax offered a two-year fix at 6.49 per cent with no arrangement fee. A borrower who took out a loan of £150,000 would pay £1,102.64 a month, or £13,231 over the next 12 months. The deal has an ERC in the second year of 3 per cent of the loan, which is about £4,500.

Compare this with the current best-buy tracker on the market: First Direct's full-term offset deal, pegged at 1.49 percentage points above the base rate, giving a current rate of 3.49 per cent. If the Bank of England cuts the base rate to 1 per cent this month, as some economists predict, the rate on the mortgage will fall to 2.49 per cent.

The repayments on a loan of £150,000 if the rate falls to 2.49 per cent would be £672 a month, or £8,064 over the course of a year. If you add on the £4,500 ERC for moving from the Halifax deal, the total annual cost increases to £12,564, providing the homeowner with a healthy annual saving of £667. The First Direct deal is available only to borrowers with at least a 20 per cent deposit, but there is no ERC.

Mr Cook says: “Unfortunately, those households who have a smaller deposit will be paying a higher premium for risk today than they needed to pay a year ago.”