It is unlikely that new borrowers will see much benefit from the interest rate cut, according to commentators.

The cost of mortgage deals for new customers is expected to keep on rising despite the Bank of England's Monetary Policy Committee reducing the base rate for the third time since December.

The mortgage market is presently changing on a daily basis as lenders reprice their loans and withdraw deals that are attracting too much business.

Louise Cuming, head of mortgages at Moneysupermarket.com, said it was unlikely any of the reduction would filter through to new mortgage rates.

The average cost of a new two-year fixed rate mortgage for those with a 5% deposit hit a seven and a half year high of 6.64% at the end of last month, compared with an average rate of 5.51% at the end of November, before interest rates started dropping.

And two more lenders, Alliance and Leicester and Nationwide are increasing their rate for new borrowers.

Alliance & Leicester is repricing its entire mortgage range for the second time in three days, increasing its rates by up to 0.35%.

Nationwide is also raising some of its fixed rate deals, increasing them by between 0.12% and 0.32% - just two weeks after it last increased the cost of its fixed-rate range by 0.2%.

And Abbey, the UK's third biggest lender, has already increased its two-year tracker deals by up to 0.35%, more than wiping out the reduction.

Michael Coogan, director general of the Council of Mortgage Lenders, warned that in the current "dysfunctional market conditions", the base rate was not a good guide to the cost or availability of funds to lenders.

He said: "To improve the market in which lenders are operating and restore consumer confidence, the bank needs to co-ordinate successive base rate cuts with further injections of more widely available liquidity.

"We would like to see another base rate cut next month partnered with more liquidity auctions, of higher amounts, over longer terms, and available to a wider range of institutions. This co-ordinated approach would help to show the authorities are serious about tackling the market problems."

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