Borrowers have breathed a sigh of relief after Bank of England rate setters trimmed the cost of borrowing by a quarter point to 5.25%.

The cut is the second in three months following a similar cut in December and should help restore confidence in the property market.

A raft of mortgage lenders were quick to announce they would be passing on the interest rate cut in full.

Halifax, Nationwide, Abbey and Royal Bank of Scotland/NatWest were among those to confirm a 0.25% reduction in their standard variable rates.

There had been concerns that mortgage firms would fail to pass on the cut as the credit crisis has caused wholesale money market costs to soar.

Lenders' decisions to shave rates by a quarter-point will reduce monthly repayments on a typical £100,000 mortgage by around £16 a month to £722.80, based on a new rate of 7.25%.