A rise in interest rates is generally passed onto savers. Likewise a cut in interest rates should benefit those with a mortgage. But it does not seem to be happening in our current economic climate.

Abbey National was the only large lender to announce a cut, and even then it was only 0.1%. Virgin, which is anxious to expand its mortgage base, was the only one to pass on the full quarter percent. The Halifax, the country's biggest lender with 2 million borrowers, left its mortgage rate unchanged.

Return to a housing boom?

Its decision was influenced by signs that the housing market is heating up. Previous cuts to rates have been used to stimulate the market, but with house prices rising 2% in May alone, it seems the market is already hot enough.

Cost is another factor. Lenders have to shell out millions of pounds after a change in interest rates.

Many now believe interest rates have bottomed out at 5%, so they're reluctant to send out yet another letter to all their borrowers if the next move is going to be up.

In any case many lenders feel it is time for savers to be protected. There are six savings accounts to every mortgage and they've suffered particularly badly recently, with seven interest rate cuts in the last nine months.

More competition

The entry of supermarket chains and others into the financial services game has shaken up the high street players who realise they face fierce competition.

Each cut over the last year has seen the gap between the cost of borrowing and the level of interest on savings widen. The average instant savings account now only attracts 1.5% on deposits of £5000, compared with the 3.8% it would have got five years ago.

Savers can console themselves with the fact they've escaped quite lightly with this latest cut.

But having suffered so much for so long, their best hope is to look ahead to the year 2000, when it's thought the next change in interest rates will be upwards.