Lenders have come under pressure to make hefty cuts in their mortgage rates following the shock cut in interest rates by the Bank of England.
Prime Minister Gordon Brown says the government has met with bankers in a bid to ensure that lenders pass on Thursday's cut in interest rates.
But the Council of Mortgage Lenders has responded by saying lenders will cut rates by 0.5%-1.5% in the coming weeks.
He said the Treasury and the Bank of England had taken action to help lenders and it was now their turn to take the lead.
The Bank Rate was cut from 4.5% to 3% on Thursday and the chancellor has called on lenders to pass the rate reduction onto their borrowers.
The Bank of England's official rate was cut from 4.5% to 3% on Thursday in a move that shocked markets.
So far, only Lloyds TSB and Abbey have said they will pass the cut on in full.
So far, only Lloyds TSB and Abbey have said they will pass the cut on in full
"We are determined to get banks to resume lending," Mr Brown said.
Chancellor Alistair Darling held a breakfast meeting with bank bosses this morning to press the government's case.
The meeting, held at the Treasury, has now finished and the banks attending were thought to include Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide, RBS and Standard Chartered.
'Commercial decision'
The Council of Mortgage Lenders (CML) said lenders will cut rates by 0.5%-1.5% in the coming weeks.
The CML warned that the precise level of the reductions would be a commercial decision for each individual lender.
The CML warned that the precise level of the reductions would be a commercial decision for each individual lender.
Michael Coogan, director general of the CML said: "The problem banks have got is that they have limited funds and don't have enough money to give to all the customers who may want them."
Michael Coogan, director general of the CML said: "The problem banks have got is that they have limited funds and don't have enough money to give to all the customers who may want them.
"I think over the next few days and weeks we will see that the banks and building societies will move by anywhere between 0.5% and 1.5% - the individual decisions will be on the basis of assessing what they want for their savers as much as what they want for their borrowers," he added.
"I think over the next few days and weeks we will see that the banks and building societies will move by anywhere between 0.5% and 1.5% - the individual decisions will be on the basis of assessing what they want for their savers as much as what they want for their borrowers," he added.
'Fly in the ointment'
In the wake of the bank's surprising decision, lenders came under immediate political pressure to pass it on to their customers.
"I think it's essential that the banks do pass on the benefit of lower interest rates to people and to businesses," Mr Darling said.
Chancellor Alistair Darling calls for banks to take action
"Banks need to understand that they need to help their customers."
John McFall, chair of the Treasury Select Committee, put it more strongly.
"The banks are the fly in the ointment," he told BBC News.
"The banks got themselves into this problem and it was the taxpayers who rescued them."
But in an interview with BBC political editor Nick Robinson, Mr Darling would not be drawn on whether he could force banks to cut rates, even those that are largely owned by the government.
"As shareholders the government clearly has huge power," our correspondent said.
"However, as one Treasury insider put it to me, it's the power a Sainsbury shareholder has to raise concerns about pricing policy not the power to set the price of cabbages in Wigan."
'Under review'
Before the rate cut, Lloyds TSB/Cheltenham and Gloucester announced that they would pass the cut on in full to Standard Variable Rate (SVR) customers.
After the cut, Abbey announced it would also be passing it on to all of its existing customers on variable rate mortgages.
Other major lenders such as HBOS, Barclays and HSBC have said their variable rates are "under review".
Nationwide, the UK's biggest building society, said it was "monitoring the markets" before making a decision.
Almost all tracker mortgages have been withdrawn for new borrowers as lenders consider at what rates to reintroduce them.
The problem, according to the Council of Mortgage Lenders, is that the key to mortgage costs is not the Bank of England's base rate but Libor - the London Interbank Offered Rate - which is the rate at which banks lend to each other.
"This will be a key figure to watch in terms of assessing how much of the cut is likely to be passed on in rates offered on new tracker mortgages and in lenders' SVRs," said Ray Boulger, of mortgage brokers John Charcol.
Friday's daily Libor figure will be closely watched - it will almost certainly still be well above the Bank of England rate, but the question is how far it will have fallen from Thursday's fix.
The figures, which are compiled by the British Bankers' Association, are released shortly before 1200 GMT.
