STRUGGLING homeowners were given a major boost today as the Bank of England cut interest rates by a full 1%.

The dramatic move takes the cost of borrowing down to 2%, equalling the all-time low.

Some leading lenders vowed to pass the full cut on. Britain's biggest mortgage lender, Halifax, confirmed it would hand on the cut to its 600,000 borrowers with base rate tracker deals.

Lloyds TSB and HSBC said they would be passing on the full reduction to their variable rate customers.

But others were slower to respond, with most saying their SVR was under review.

The Council of Mortgage Lenders welcomed the cut, but warned that it may not be reflected "universally" in lower mortgage rates.

If lenders do pass on the full cut, it will save borrowers with a £150,000 mortgage around £85 a month.

People with a £250,000 mortgage would save around £142 a month.

Business body the CBI cheered the bold rates cut.

Ian McCafferty, CBI chief economic adviser, said: "The economy needs a significant monetary stimulus and the Bank has clearly decided this will be best achieved by another big cut in interest rates.

"What is critical for business and consumers alike is that this reduction is passed on."

News of the cut came as homeowners waited for full details of a Government rescue plan which will give them a two-year mortgage holiday - funded by the taxpayer.

Under the Home- owner Mortgage Support Scheme, people who experience a significant temporary loss in their income will be able to defer a proportion of the interest payments on their home loan for up to two years.

The move could leave the Government with liabilities of about £1billion, as it has guaranteed that lenders will not lose money if borrowers are later unable to repay the debt.

Eight lenders, accounting for 70% of the market, have already agreed to be part of the scheme, including major players such as Halifax Bank of Scotland, Abbey and Nationwide.

It is thought banks were taken by surprise by the scheme, details of which are still being finalised.