While the Bank of England has cut the base rate by 4.5 per cent in the last 12 months, the average cost of a mortgage for new borrowers has only fallen 1.3 per cent.

This has led price comparison site moneysupermarket.com to question what constitutes a good mortgage deal in the current environment.

With the Bank of England rate at record lows, homeowners hoped to see mortgage rates follow suit.

But, while tracker mortgage customers have benefitted considerably, sometimes seeing hundreds of pounds drop off their monthly mortgage payments, the benefits have not come to pass for the majority of the mortgage market.

Despite the falling base rate, “there is a significant disparity in the amount of this saving being passed on to mortgage borrowers by the main UK lenders,” said Hannah Skenfield, mortgage channel manager at moneysupermarket.com.

Some mortgage lenders have failed to reduce their rates for new customers at all, moneysupermarket.com’s data has shown, while others have dropped them a token amount.

Nationalised bank Northern Rock, for example, has cut its mortgage rates by an average 0.27 per cent.

But at the other end of the scale, Alliance & Leicester mortgage rates have come down by an average 2.30 per cent.

Consequently, the gap between the cheapest and most expensive average mortgage rates has grown wider – to 2.5 per cent, compared to 0.93 per cent in 2008.

Commenting on the disparity between the two ends of the mortgage market, Ms Skenfield said that this illustrates how “shopping around for the best deal is more important than ever before.”

© Fair Investment Company Ltd