Just over a week has passed since the Bank of England reduced the base rate by one and a half percentage points, cutting costs for millions of mortgage borrowers and at least offering hope to millions more who did not see their repayments fall. Trackers and some variable-rate mortgages have come down, reducing the monthly outgoings for homeowners with these deals. However, from everyone else the response has been a rather underwhelmed: “So what?”

Even after pressure from the Government many lenders have remained reluctant to pass on the full one and a half percentage point reduction to borrowers. Meanwhile the cut has done little to restore confidence, mortgage brokers say, with lenders becoming stricter than ever before.

The view from those in the know is that a return to more buoyant borrowing - and consequently an improvement in the housing market - will depend on lenders making deals more available, not on rates coming down - and this has yet to happen.

In the past seven days the number of deals has fallen by 15 per cent, and 395 home loan products have vanished from the market - most of them trackers, according to Moneyfacts.co.uk. Tracker rate borrowers who took out deals last month paid the highest rates for seven years, even after the half a percentage point cut in September, with the average rate rising from 6.12 per cent that month to 6.84 per cent in October, according to the Bank of England.

“Those coming up to remortgage are likely to be disappointed,” says Melanie Bien, of the broker Savills Private Finance. “Pay rates on new tracker deals launched this week are no cheaper than before the rate cut, while restrictions are more marked than ever: low maximum limits on loans of 60 or 75 per cent of the property's value, and, in some cases, low maximum loan sizes of £250,000.”

So, you need a mortgage? Here is what you must know, if you are a ...

Homebuyer or remortgager

Ray Boulger, of John Charcol, says: “There are two main problems. The first is if you do not have a big enough deposit, or equity stake if remortgaging. Even with 10percent equity, there is a fairly limited choice. There are currently no tracker mortgages out there for people with less than a 25 per cent deposit.

“A further problem for those remortgaging is the valuation. With a sale there is an agreed price but with a remortgage it is simply a valuer giving a very subjective view. And in the current climate of falling property prices, valuers are being over-cautious. So people who thought they might have 75 per cent equity in their property are finding they only have, say, 80 per cent and are unable to get the better deals.

“The second problem is if you have credit problems. Any slight blemish on your credit rating can cause your mortgage application to be rejected. Check your rating before applying for any type of mortgage to be certain.

“Rates will come down farther but we do not know when. We are beginning to see two-year fixed rates under 5 per cent from some of the bigger lenders. It is still too early to say when we are going to see the bottom of the rate cuts, but there is going to be a huge opportunity at some point for people to grab a cheap fixed-rate deal on a relatively long-term basis.”

Best buy: An Alliance&Leicester tracker pegged at 1.49 per cent above the base rate, with an arrangement fee of 1 per cent. “This is good value, providing you are not borrowing too much,” Boulger says. On a £150,000 loan, repayments would be £832.90 repaying capital and interest.

First-time buyer

Jonathan Cornell, of Hamptons International Mortgages, says: “The main problem facing first-time buyers is the size of the deposit that lenders require. Long gone are the days that they did not need to save a penny. Lenders have also tightened their affordability criteria more and more. As the cost of living has gone up they have been able to afford even less, leaving them in a mess. It is more important than ever for buyers to save as much as they can - the bigger the deposit the better the loan rate. Another major obstacle is your credit rating. It is imperative for all credit payments to be paid on time - without a squeaky-clean credit score you will find it very difficult to get a mortgage. I think that people who have made the decision to buy, seen a property they like and think it is good value should not dither and act now.

“However, house prices will fall farther, and as more lenders enter the market again over the coming months it might be worth holding fire. Some lenders are offering 95 per cent mortgages but only directly through the branches and call centres.”

Best buy: “First-time buyers want peace of mind and are more likely to go for a fixed rate,” says Richard Morea, of the broker London & Country. HSBC has a two-year deal fixed at 6.44 per cent up to a loan-to-value of 90 per cent; it has a £599 fee but no higher lending charge. This would cost £1,007 on a £150,000 loan.

Landlord

Lee Grandin, the managing director of Landlord Mortgages, says: “The base-rate cut has been no help to confidence - if anything it has made things worse. There has been no improvement in availability. Criteria have tightened further. Some lenders say that the maximum loan-to-value is 75 per cent but in practice they are not accepting anything more than 70 per cent. Lenders are not keen on offering deals to landlords unless they can stump up a lot of cash. Those without have to stick with the standard variable rate (SVR). The good news here is that at least these are coming down after pressure from the Government.

“Experienced landlords are benefiting from the market because they are now able to buy up cheap properties that are potentially as low as 50 per cent below their peak. At this kind of discount the property is genuinely cheap, regardless of how much farther prices fall, and yields on some properties are now above 10 per cent, which is really good. What lenders now need to do is assess what they are willing to offer on a case-by-case basis and offer better deals specifically to those landlords who have secured big discounts, as there is less risk of further price falls on these properties. No lender is doing this yet.”

Best buy: A three-year 6.29 per cent fix from Birmingham Midshires, with a maximum loan-to-value of 75 per cent and a fee worth 3 per cent of the loan. “Not really a best buy as it's an appalling rate,” Grandin says, “but we are doing a lot of business on it.” On a £150,000 loan this would cost an investor £786 a month on an interest-only basis - with a £4,500 fee.

Explore Property

• Buying & Selling

• New Homes

• Overseas

• Interiors

• Investment

• Gardens

• Cool In Your Code

• Specials

• First-time buyer

• Rental Market

Times recommends

• Second homes: credit crunch casualty or money-spinner?
• How I built my own sliding house
• Top 10 incentives for house buyers