"Normally, fixed rates would go up as the markets adjust to such a change in expectations. So to see some lenders actually cutting mortgage rates is a very positive sign.

“It’s early days, but even if base rate cuts are now on hold, if lenders actually begin to pass on the benefit of previous cuts to mortgage borrowers we could really begin to see light at the end of the tunnel.”

Stuart Law, chief executive of property investment firm Assetz, said:  “This is an early sign that the effects of the credit crunch are beginning to ease off.

“However, there are still some lenders increasing rates, pulling out of the market temporarily and changing  lending terms. I believe it will take until around September for the mortgage market to improve significantly and it may turn out to be prudent for people coming to the end of existing mortgage deals to just accept the standard variable rate for a few months before remortgaging.”

Home owners have struggled in the aftermath of last year’s run on  Northern Rock and the ensuing economic turmoil.

Even people with perfect credit records have been refused mortgages, and lenders have withdrawn their cheapest rates as they cannot afford to borrow the money to lend.

Particularly hard hit are the millions coming to an end of fixed-rate deals only to find they cannot remortgage to a cheaper product. They are left with no choice but to go on to their lender’s expensive standard variable rate.

Despite three recent base rate cuts by the Bank of England, many banks and building societies have not passed them on to customers.

Around 27 of the 102 lenders have not reduced their standard variable rate a month after April’s cut, according to the financial information group Moneyfacts.co.uk.

The majority of those lenders are small banks and building societies, with internet bank Egg also keeping its SVR on hold.

A further 18 lenders have passed on some but not all of the cut, including the recently nationalised bank Northern Rock, which reduced its SVR by just 0.1 per cent.

However, the Abbey has trebled its share of the new mortgage market as it seeks to capitalise on its rivals’ credit-crunch woes. The firm, owned by Spanish bank Santander, took 15.9 per cent of the market in the first quarter of 2008, up from 4.9 per cent a year earlier.

New lending more than doubled to £2.9billion as Abbey said it relies on money markets for only 10 per cent of its lending and has no exposure to sub-prime debt.

Yesterday’s rate cuts followed official figures showing that new housing starts had tumbled by almost a quarter. In the first three months of 2008 house building was at its lowest level for 12 years.

Firms began work on 32,100 dwellings in England during the first quarter, 24 per cent below the same period in 2007 and the worst since 1996.

The gloomy figures follow profit warnings from a host of housebuilders.