Interest rates have been cut to 5.00%.

December saw the first drop in interest rates in more than two years as the Bank of England tried to stabilise the economy in the wake of rising inflation, a global credit crunch and a slowing housing market.

Lower interest rates mean anyone with a tracker mortgage will see their payments fall immediately.

People on discount and variable rate mortgages are also likely to see their payments fall, but this is not guaranteed. About 18 of the country's 103 mortgage lenders had still not passed on December's cut by the start of January, with 16 others reducing rates by less than the full 0.25%.

If lenders pass on the new cut in full it will save you £20.83 a month on a £100,000 interest-only mortgage, £31.25 on a £150,000 interest-only mortgage and £52.08 on a £250,000 interest-only mortgage. The equivalent savings for a repayment mortgage are £14.84, £22.26 and £37.10 a month, assuming a 25-year term.

Those on fixed-rate mortgages will not see their repayments change yet - but should be in a better position to find a cheap deal when their fixed-rate term expires. This is good news for the estimated 1.5 million homeowners with fixed-rate mortgage deals expiring in this year.

Savers should currently be benefiting from the interest rate rises since August 2006, as well as from the credit crunch, and if you are not earning at least 5% you should switch. The best instant-access savings accounts are paying more than 6% at the moment, with 6.5% available on notice accounts.

Additionally, savers have been enjoying something of a golden period recently, with banks competing to draw in their money. Another interest rate cut should not affect this situation too drastically.