The Bank of England’s Monetary Policy Committee’s decision to reduce the official Bank Rate by 1.5 percentage points to 3 percent took the property industry by surprise, but there has since been open condemnation towards the majority of banks who have been slow to pass on the interest rate cut to borrowers.

NLA Mortgages, the free sourcing and quotation system for residential landlords, has expressed doubts that the interest rate cut will encourage lenders to pass on the savings to landlords.

Simon Gordon, Head of Communications for the National Landlords Association, said: “It’s about time lenders started to play ball and pass these latest rate cuts on to landlords. Part and parcel of the Government bailout was the requirement for lenders to start lending to consumers. It’s critical for the health of the property market for landlords to have access to mortgage finance.

“Despite recent reductions to the base rate, there is very little evidence that banks and building societies are helping buy to let borrowers by cutting their rates. At a time where rental demand is on the up across the UK, many professional landlords will be looking to expand their portfolios, thus providing much needed housing.

“Demand for buy to let mortgages is high but landlords are being frustrated by a lack of suitable products. With fewer people able to get their hands on decent deals, there is a danger that the housing needs of many tenants will not be met.”

The cut is great news for buy to let investors with tracker mortgages believes Neil Young CEO of the Young Group which specialises in property portfolio management services to private investors.

He said: “The death of buy to let is something that’s been touted in the press for some time, but looking at the hard facts the picture is far from one of doom and gloom.

“Providing that investors have purchased sensibly and had the right advice regarding mortgage products and projected rental income, they will weather the current economic climate.

“However, the current issue is regarding new mortgages where we’ve seen lenders protect their own positions and a number of well-known high street lenders have imposed collars on their tracker deals, limiting the amount by which the mortgage holder can benefit in the event of substantial base rate reductions.

Since the previous 0.5 percent base rate cut on 8 October, many lenders have discontinued their tracker products on the assumption that further base rate cuts were in the offing and are now only offering fixed rate products.

“The MPC clearly believes that the UK economy will benefit in the medium term from this further cut in base rate, and those on a tracker mortgage will see a significant immediate benefit. I urge lenders to reflect the base rate cut in their wider mortgage products,” said Young.

The Council of Mortgage Lenders (CML) welcomed the decisive move and director general, Michael Coogan, said: “The Bank of England has grasped the nettle in a worsening recession environment.

“What is important is how this feeds through to lenders’ borrowing costs - and lenders will need to balance the interests of savers, as well - but such a sharp downward movement provides more room for lower borrowing costs more quickly.”

Mortgage lenders have “run out of excuses” for not passing on Bank of England base rate cuts to borrowers, says online mortgage company mform.co.uk.

Its analysis shows money market rates on two, three and five-year terms – used by mortgage lenders to secure cash for fixed rate deals – have dropped by as much as 0.37 per cent in the past month and coupled with signs of the LIBOR freeze easing should mean improved fixed-rate offers in the next month.

Eamonn Rice, chief executive of mform.co.uk, said: “Lenders have finally run out of excuses and must now do the decent thing and pass on the rate cut in full. The bail-out deal with banks supposedly had a condition that they should make funds available to mortgage customers and small businesses. Taxpayers are entitled to wonder when the banks are going to fulfil their part of the bargain.”

Jones Lang LaSalle believes the MPC had little option but to reduce the base rate, the only real decision was by how much.

Neil Chegwidden, Head of Residential Research at Jones Lang LaSalle said: “Even despite the dramatic base rate cut, we believe it will not help the UK housing market in the very short-term. The fact is that the incredible escalation of financial events over the past couple of months has significantly heightened the likely depth and duration of a UK recession and has also weakened the economic outlooks of almost all other nations.

“So now, because of the latest round of financial crises and bail-outs, and in spite of the base rate cut, house price falls are likely to escalate again rather than ease and turnover is set to slow further.

His sentiments were echoed by Liam Bailey, head of residential research at Knight Frank, who said: “Today’s shock interest rate cut is clearly welcome news for the housing market. It is unlikely, however, that even a 1.5 percent cut will have any immediate effect on mortgage volumes or house prices.

“LIBOR remains stubbornly high as a result of the crisis in the banking system. As most banks fund mortgage borrowing through the wholesale markets, the rates available to homebuyers are unlikely to fall in the short-term.

“Of course, the Government’s bank rescue plan may eventually bring more liquidity to the system, but it will take some time for confidence to be restored. The lenders themselves will remain focussed on their own financial health. They will remain highly risk-averse, demanding large deposits and only accepting the most secure applicants.