Dunfermline customers in Scotland, England and Northern Ireland will receive letters this month to tell them about the drop, which will make someone on a £100,000 mortgage more than £800 a year better off.
Some 7,800 Dunfermline customers are currently on a standard variable rate (SVR) of 5.19%, but this will slide to 3.99% from November as the mutual takes a further step towards integration with its parent building society Nationwide.
Dunfermline was taken over in the wake of the financial crisis in a deal brokered through the Government and regulators and its full integration into the Nationwide brand is set to begin next spring.
Nationwide customers are already on an SVR of 3.99%, as are those of Derbyshire and Cheshire building societies, which also operate under Nationwide.
Customers will be told how the changes affect them individually, but Nationwide said that as an example, a Dunfermline customer with a £100,000 mortgage will see their repayments drop by just over £68 a month to reach £527.
Cheshire and Derbyshire merged with Nationwide in 2008 and Dunfermline was taken over the following year.
Plans were announced last year to bring the three smaller mutuals fully into Nationwide's main operations, which means all three societies will be operating under the Nationwide brand by mid-2015. Dunfermline will be the first to fully integrate.
Nationwide has spent £1 billion on beefing up its IT systems in the past five years. The changes will mean that around 85% of customers of the smaller mutuals will live within five miles of their building society branch, compared with 70% under the current arrangements.
Tracie Pearce, head of mortgages at Nationwide, said: "As we move towards bringing all Dunfermline, Cheshire and Derbyshire Building Society customers together within the Nationwide Building Society, we are in a position to pass on the benefit of a lower SVR to Dunfermline's borrowers."
Nationwide boasted a record share of the mortgage market earlier this year after seeing a big rise in the number of first time buyers joining the property ladder.
The society accounted for 15% of all UK residential mortgage lending during the last financial year and was responsible for almost one in five of all first-time buyer mortgages in the UK.
The rate cut comes at a time when record low interest rates, which have helped mortgage lenders to offer some of their cheapest ever deals, are expected to remain in place for years to come.
Despite the bank rate being held at a historic 0.5% low, some mortgage holders have recently been told the bad news that their monthly payments were going up.
West Bromwich Building Society confirmed last month that it is hiking rates on some of its tracker loans, affecting around 6,700 customers, in a change which will increase repayments on a £200,000 loan by an estimated £330.
Earlier this year, Bank of Ireland told 13,500 customers, many of whom had taken out loans with subsidiary Bristol & West, that rates on their tracker deals were being increased sharply. It later announced a partial backtrack when it cancelled the rise for 1,200 borrowers after the Financial Conduct Authority became involved.