The Chancellor, Alistair Darling, called for banks to pass on the benefit of lower interest rates to borrowers.

Most of the main lenders, as well as most of our local banks, have now indicated that they will pass on the full base rate cut on their main variable lending rates but not all lenders have taken this action yet.

Around 50 per cent of existing mortgages are fixed rate deals and those of us on these types of mortgage will not be affected by changes in the interest rate until the deal comes to an end, unless you can get out of the deal early.

However, those of us with mortgages that track the base rate, as well as those on variable rates with lenders who decide to apply the cut, will see their monthly repayments reduce, but there are some borrowers whose lender may decide not to pass on the cut.

The reason that some lenders have been hesitant to reduce their interest rates for borrowers is because the LIBOR rate (the rate at which banks lend to each other) has not reduced as much as the base rate.

Therefore, lenders will have reduced profits if they pass on the full 1.5 per cent base rate reduction.

If your lender is not passing on the interest rate cut, you might want to consider if you could get a better mortgage deal elsewhere.

However, the current mortgage market is not offering much choice and you may suffer penalties to come out of your existing mortgage deal.

Another option would be to consider paying off some of your mortgage now if you have enough savings to do so.

You should compare the rate of interest you are paying on your mortgage to the net rate of interest you are receiving on your savings and if the former is significantly larger than the latter, it might be worth using some of your savings to reduce your mortgage. (Note that you generally do not get tax relief on your mortgage interest payments but you are liable to tax on the interest on your savings.)

You should ensure that you leave yourself with enough savings because if you need money in the future it might not be easy to re-mortgage your home or even arrange other borrowings.

One way in which the banks can improve their position is by encouraging customers to save with them and, to do this, they need to offer attractive rates of interest.

Unfortunately, a cut in the base rate intended to reduce the pressure on those with borrowings could also reduce the interest rate for those with savings so this may deter people from saving with the banks.

So, what else is available for savers if interest rates on savings accounts plummet? If you act quickly you may be able to lock yourself into a fixed rate bond with a more attractive rate of interest than a standard savings account.

Many of the banks have already cut the rate of interest being offered for any new fixed rate bonds but they could still be worth considering as experts are predicting a further decrease in the base rate next year.