Mortgage lenders tried to defend their decision to withhold the Bank of England’s 1.5 percentage point interest rate cut from borrowers yesterday, in the teeth of a public and political backlash.

Only Lloyds TSB and Abbey reduced standard variable rates in line with base rates. Other large lenders said they would wait until next week before making any alterations to prices.

The majority of tracker rate mortgages, which mirror the Bank base rate, have been temporarily removed from the market.

Matthew Carter, director of mortgages at Nationwide, said the decision to withdraw products was 'a prudent measure in the current climate'.

Lenders, especially those backed by taxpayers money, are under heavy ministerial pressure to pass on any interest rate cuts to help struggling homeowners.

Estate agents said yesterday that unless lenders lowered mortgage rates the UK housing market would remain stagnant.

Financial Times