The last cut, an emergency 1.5%, was intended to stimulate spending and stave off recession but the economy has continued to suffer.
The cut also brings the current interest rate to the lowest level in the Bank’s 400 year history – it’s never gone below 2% since the Bank was set up in 1694.
HBOS has committed to passing on the full cut on all tracker products while other lenders have yet to reveal the action they will take.
Adrian Coles, director-general of the Building Societies Association, says: “Homeowners will welcome the Monetary Policy Committee’s decision to cut the Bank Rate by 100 basis points to 2%.
“But not all mortgage borrowers will find today’s fall mirrored by their lender – building societies have to balance the interests of borrowers and savers.
“Although low interest rates are good news for borrowers, they are not so good for savers.”
Ben Thompson, mortgages director at Legal & General, says today’s cut should be beneficial but he says there is also the urgent ongoing requirement for many lenders to further build their retail savings base.
He says: “Some lenders will reduce their SVR’s by the full amount, but unfortunately, the challenge of building their savings base may limit the extent to which lenders will directly pass on the rate cut to all borrowers.
“Lenders need savers to function properly and they won’t attract savers with paltry rates.
“Confidence will inevitably return, but by then the base rate will no doubt be close to as low as it can go.”