More than five million homeowners have benefited from interest rate cuts of 0.5% by the Bank of England.

About 4.2 million households with a tracker mortgage will be boosted by the cut in the official cost of borrowing and a further 800,000 on standard variable rates (SVR) could also see their repayments fall.

Britain's biggest mortgage lender Halifax, Lloyds TSB - which also lends under the Cheltenham & Gloucester brand - Barclays' mortgage arm the Woolwich, NatWest and Royal Bank of Scotland have all announced plans to reduce their SVRs by the full 0.5%.

Other major lenders appear to have been surprised by the move as the Monetary Policy Committee had not expected to announce the results of its interest rate setting meeting until Thursday.

But the majority are expected to follow suit after a £50 billion bail-out plan for the banks was revealed by the Government.

If lenders do pass on the cut in full it will knock around £47 off monthly repayments on a typical £150,000 mortgage, reducing repayments to £1,012.81 a month and saving consumers £570 a year, based on a new rate of 6.5%.

People who are heavily mortgaged with loans of £250,000 will benefit even more, saving £79 a month or £950 a year.

The base-rate cut, which was part of a co-ordinated action by central banks around the world, leaves the official cost of borrowing in the UK at 4.5%.

Michael Coogan, director general of the Council of Mortgage Lenders, said: "The package of bank funding and capital measures is further strengthened by this rate cut.

"All this decisive action augurs well for an improving market situation looking ahead, even though no-one is pretending the tough times are over yet."

But Louise Cuming, head of mortgages at moneysupermarket.com, said: "This is not a magic cure-all and we won't see either the mortgage or the housing market bouncing back to where it was 18 months ago. Sadly, too much water has passed under that bridge to be ended by a quick fix."

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