Certain borrowers can now secure a mortgage rate below 3% as lenders have taken the axe to their new deals following last week’s base rate cut.

Few rate reductions have reflected the full half-point Bank of England cut, however, as banks continue to enhance their profit margins.

HSBC yesterday launched its cheapest mortgage ever, a variable deal priced at 2.99%, but only for customers who fit certain criteria. Alliance & Leicester will cut its best two-year fixed deal to 3.19% on Friday, while Abbey and Woolwich have revealed new rates starting from 3.69% and 3.79% respectively.

'There are some very good rates out there now, although many are still not coming down as fast as we might expect,' said Melanie Bien, at Savills Private Finance, the mortgage broker.

Financial Times