A number of major mortgage lenders have moved to reduce their standard variable mortgage rates (SVRs) in the wake of the decision of the Bank of England's monetary policy committee to reduce the interest rate from 5.75 to 5.5 per cent.
Although First Direct is the only bank to have announced that its SVR will be cut with immediate effect, others have revealed in advance that their rates will be reduced in the new year.
The Co-operative Bank will cut its SVR by 0.25 per cent on January 1st to 7.49 per cent, with the Halifax following suit to leave its SVR rate at 7.50 per cent.
Meanwhile, Nationwide said it would decrease its Base Mortgage Rate (BMR) from 1 January 2008 from 7.24 per cent to 6.99 per cent and its tracker mortgages will also move downwards at the same time.
According to Peter Bolton King, chief executive at the National Association of Estate Agents, the rate cut - and the decision of many lenders to pass it onto consumers - will have significant implications for the mortgage market.
"This is just what the market needed," he said.
"There has been considerable doom and gloom lately as we have had to endure the fallout from some significant national and international events.
"This latest rate decrease will at least go some way towards repairing the damage done. I'm hopeful this will be the turning point in consumer confidence that will set the market back on track again."