The company has knocked 0.3 per cent off its base rate standard variable mortgages in response to the Bank of England's emergency 0.5 per cent cut in interest rates last month.

The move comes despite half of all lenders refusing to pass on the national reduction to their home-loan customers, with some banks and building societies even putting their rates up.

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And after the Bank of England yesterday further reduced interest rates by an unexpectedly high 1.5 per cent, Norwich and Peterborough says it will review the deals offered to its 34,000 mortgage customers again.

However, Gary Lacey, group product manager for the building society, which is based at Peterborough Business Park, in Lynch Wood, warned the latest national cut would not necessarily be reflected in its future mortgage prices.

He said: "The recent changes to our interest rates follow the emergency 0.5 per cent cut in Bank Base Rate (BBR) in October.

"We have dropped our Standard Variable Rate for mortgages to 6.75 per cent, and our savings rates have reduced by 0.5 per cent. These changes all took place with effect from yesterday.

"As to the expected cut in BBR yesterday, it's hard to immediately say how this will impact savers and borrowers.

"In this continued difficult financial climate there are many more factors which affect interest rates than simply BBR."

Many banks and building societies have recently come in for criticism after refusing to follow the Bank of England's lead by reducing interest rates on mortgages.

According to price comparison website moneysupermarket.com, only 54 out of 96 mortgage lenders have passed on last month's 0.5 per cent reduction to their standard variable rate customers and the latest cut is "unlikely" to be passed on in full.

Abbey and Halifax have actually increased the cost of some of their tracker mortgages, which vary in line with the national base rate, by up to 0.5 per cent for new customers.

Prior to yesterday's interest rate decrease, Prime Minister Gordon Brown said the Government wanted lenders to reflect the change in the cost of their mortgages.

But Mr Lacey said further decreases could take time because home-loan costs were heavily influenced more by the inter-bank lending rate, known as LIBOR, which has been slow to change.

He said: "The rate at which financial institutions lend to each other is still much higher than normal, so the change to BBR will not necessarily mean that new mortgages will become cheaper.

"Similarly, with savings rates, I'm sure providers will be reviewing their own situations and also monitoring the markets closely before making any decisions."