"Savings are the lifeblood of mortgage lending, and unless lenders can offer competitive rates to savers their ability to offer new mortgages is restricted.
"National Savings and Investments this week reported record inflows of savings, sucking more money out of the mortgage market, so this cut represents a double whammy for prospective mortgage borrowers."
The Building Societies Association (BSA) has also attacked the rate cut saying it would harm savers and further restrict funds available to borrowers.
BSA Director-General Adrian Coles called the decision a "kick in the teeth for savers who will see their already diminished interest payments fall even further".
He said: "It will be felt hardest by the many elderly people who have saved responsibly all their lives and are reliant on their savings interest to maintain an acceptable standard of living in retirement.
"It will also harm the aspirations of the many people who are finding it difficult to get a mortgage, particularly first-time buyers with relatively small deposits. Lower interest rates reduce the incentive to save, and in turn, this limits the flow of funds into the mortgage market.
"While the decision will be of benefit to some borrowers on variable rate or tracker mortgages, the reduction in repayments that they will see will not outweigh the negative impact that the reduction in mortgage funding will have on the market as a whole.
"We do, however, welcome the Bank’s announcement to implement quantitative easing and we share the Government’s hope that this will increase the flow of money in the economy and lessen the severity of the downturn."
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