Mortgage customers with Barclays, Nationwide and Lloyds see bills drop from September 1

Mortgage customers on one type of mortgage will see their bills drop overnight thanks to the Bank of England's decision to cut interest rates on Thursday.

When interest rates go down, it's a double edged sword financially. It's usually good news for people with debts like mortgages and loans, and bad news for those with lots of savings. Mortgage rates have already dropped, for those on one type of mortgage with HSBC, Barclays and Nationwide.

But you have to be on the right kind of mortgage account in order to reap the benefit of the drop in rates.

The Bank of England announced on Thursday that it's cutting interest rates by 0.25 percentage points, down from 4.25% to 4%.

The decision will instantly lead to lower interest rates for millions of homeowners who are on tracker and Standard Variable Rate mortgage products.

Unlike fixed mortgage deals, trackers move up and down with base rate changes, a bit like a variable savings account.

According to recent data, more than half of mortgage holders are on trackers, and less than half are on fixed deals, so hundreds of thousands of homeowners will be affected by the changes.

HSBC's tracker mortgage rates are currently 6.74% but will drop by 0.25% from today, August 8.

Nationwide's tracker mortgage and standard variable rate mortgages will reduce by 0.25% from September 1.

Barclays is reducing its mortgage rates by 0.25% from September 1, from 6.24% down to 5.955%. Barclays' standard variable is currently 7.74% and will drop to 7.49%.

Lloyds is reducing its Homeowner Variable Rate for mortgages from 7.74% to 7.49% (the same is true of sister bank Halifax), while its Standard Variable Rate will drop from 6.25% to 6% from September 1.

In the past, financial expert Martin Lewis has explained how interest rate cuts of 0.25 percentage points usually equal £15 per month saved for every £100,000 on your mortgage.

So for example, a £300,000 mortgage debt would have a bill £45 per month lower following the Bank of England base rate cut.

The Bank of England's Monetary Policy Committee (MPC) reduced the base interest rate by 0.25 percentage points, to 4% on Thursday.

The nine-member committee made the decision after a tight split decision which needed a second vote.

Four members wanted the rate to remain at 4.25%, four wanted it to be reduced to 4% and another wanted a sharper fall to 3.75%.

Alan Taylor, who had called for the heaviest cut, ultimately backed a 0.25 percentage point cut in a second vote.

The reduction was the fifth time interest rates have been cut since the start of last year, coming down from a peak of 5.25%.

The base rate helps dictate how expensive it is to take out a mortgage or a loan.

Many lenders have been chopping rates in recent months, including several offering deals at sub-4% levels, in expectation of the Bank of England lowering its base rate.

Experts said this could be good news for people with a fixed-rate mortgage who are coming to the end of their term, because rates have been falling relative to where they were last year.