Northern Rock has cut its standard variable mortgage rate by 0.6 per cent to 6.89 per cent from 6.95 per cent.
The move follows the recent 0.25 per cent reduction in the Bank of England's base rate.
The rate change will take immediate effect for new borrowers. Existing borrowers will have to wait until July 24 before they receive the benefit of the cut.
But borrowers who have had a Northern Rock loan for seven years or more, will now be paying a rate of 6.64 per cent as they benefit from a 0.25 per cent loyalty discount on their loan.