LONDON: Five major British lenders passed on the Bank of England's (BoE) 1.5 percentage point rate cut to their variable rate mortgage customers yesterday after the government urged them to keep lending to help stave off a recession.

HBOS, the UK's biggest mortgage lender, building society Nationwide, state-owned Northern Rock, Royal Bank of Scotland, owner of NatWest, and Bradford & Bingley all passed on the rate cut in full.

They joined Lloyds TSB and Abbey, owned by Spain's Santander, who cut their standard variable rates on Thursday.

Bank chiefs were called to a meeting earlier yesterday with UK Chancellor Alistair Darling, where he urged them to pass on the base rate reductions to help get the economy moving again.

There was broad agreement at the meeting to pass on the cuts to households and small businesses, a source said.

Just two major British banks - HSBC and Barclays - have yet to follow suit. They said they were still reviewing the BoE's rate decision yesterday.

Neither HSBC nor Barclays is taking cash from the government's bailout of UK banks. The rescue plan will see the government buying stakes of up to 57 per cent in RBS and 43pc in a combined Lloyds and HBOS. Lloyds said it would cut fixed rate products for new customers from next Tuesday, following the fall in funding costs.

It wants to see where Libor settles before introducing a lower priced tracker mortgage range next week, it said.

Libor sets the cost of borrowing between banks, and is a more significant influence on banks' funding costs than the base rate. Libor has held far above the base rate since the onset of the credit crunch.