It has been suggested that it may be some time before those with mortgages see a reduction in their repayments.

A senior banking chief today warned that mortgage lenders may not be planning to reduce interest rates on mortgages in line with the cut in the base rate expected on Thursday.

According to the Guardian, the chief operating officer David Hodgkinson at HSBC, said that although banks will do all they can to pass on the cut rate, they are unable to make a "categorical commitment".

The Bank of England's monetary policy committee are expected to announce its next base rate cut on Thursday. Many economists have predicted that the group will decide on a significant reduction following last month's half percentage point cut.

Although interest rates on home loans may not fall in line with the full reduction, Mr Hodgkinson said: "Clearly if interest rates are down significantly, the rates for borrowing will go down."

However, he lowered borrowers expectations of cheaper home loans by adding: "I am not going to say it is absolutely linear, because it depends on the particular [situation] and the risk."

Vince Cable, a spokesman for the Liberal Democrat Treasury has criticised mortgage lenders over how they are dealing with the situation, insisting that they are more than happy to pass on increases in the base rate. He said that they should work both ways if customers are to be treated fairly.