The reduction follows a review after the Bank of England’s Monetary Policy Committee decision yesterday.
The rate change is effective from January 1 and applies to both RBS and NatWest.
Offset mortgages from both will be reduced by 0.75% from December 31 with new rates from 4.20%.
Any existing customers with RBS and NatWest mortgages that track the Bank base rate will benefit from a cut of 1.00% from January 1 2009.
In addition, One Account customers will benefit from a cut of 1.00%, with rates starting at 4.10% from December 31.