Roughly a third of mortgage customers have tracker loans, the majority of which will automatically move down with the cut again.

But the cut will further cripple savers, who have already seen the interest paid on their savings dive by 83% since official rates peaked at 5.75% in 2007.

Anxious banks are still reluctant to lend despite rates at all-time lows, so the Bank is resorting to increasing the money supply - which is uncharted territory for the Bank's Monetary Policy Committee (MPC).

Most of the £75 billion will be used initially to buy Government bonds, and Chancellor Alistair Darling has given permission to extend the amount to up to £150bn.

Despite the cuts over the last few months increasing numbers of homeowners on standard variable rates (SVRs) are failing to benefit from as lenders stop passing on the reductions.

Only a third of banks and building societies with standard variable rate (SVR) mortgages passed on any of February's 0.5% fall in the base rate to their borrowers, and even fewer are expected to do so now.

Lloyds TSB, which also lends under the Cheltenham & Gloucester brand, Nationwide and Halifax are all reducing their standard variable rate (SVR) by the full 0.5% this time round, while Abbey is cutting its rate by 0.45%.

Some major players, including HSBC and Abbey, failed to cut their SVR at all, while only a handful of lenders reduced their rates by the full 0.5%.

The two-thirds of lenders who failed to make any reduction to their SVR was double the proportion who did not pass on any of the cut in January, according to financial information group Moneyfacts.co.uk.

A similar pattern is likely to be followed this month.

Savers crippled

This morning angry demonstrators descended on the Bank of England to protest about how cuts in interest rates are crippling savers.

Savers have found themselves increasingly affected as the credit crunch tightens its grip on the economy.

Given that the Government's other measures have completely failed and the recession continues to get worse, this was a last resort

Interest rates have repeatedly fallen with the latest figures from the Bank of England showing that saving rates plunged to a record low during January, with notice accounts now paying an average of just 0.29%.

Protester Ian Dixon was made redundant in December as the hydraulics firm he worked for struggled to cope in the face of the recession.

The 45-year-old, from Whitby, North Yorkshire, said the prospect of finding another job was bleak.

Mr Dixon, brandishing a National Savers and Pensioners Union (NSPU) placard, said: "I can't remember a situation as bad as this before, either in the 1980s or 1990s.

"There's a lot of people struggling and a lot more will go the same way.

"I found there's lots of people chasing a tiny handful of jobs."

Mr Dixon said he was lucky he owned his own home but warned that those who relied on their savings were being clobbered.

He added: "It's the savers who are bearing the brunt of this.

"There's just no return on savings any more and many work pensions are worthless.

"Pensioners who rely on their savings are really struggling.

"And it seems the bankers who've done all the damage seem to be the ones who are being rewarded for it."

Shadow chancellor George Osborne said the Bank's move was "a leap in the dark".

Mr Osborne told BBC News: "Given that the Government's other measures have completely failed and the recession continues to get worse, this was a last resort.

"I don't think anyone should be pleased that we have reached this point. It is an admission of failure and carries considerable risk. "Let us hope that this approach taken by the Bank of England does lead to an easing of credit conditions.

"This is a leap in the dark and we will see whether it works."

Share this article

Diggit
Reddit
Delicious
Farkit
Stumble
Facebook