Interest rates cut to 1%

The Bank of England has cut the interest rate from 1.5% to 1% - the lowest point since the institution was founded in 1694.

The move comes against a backdrop of increasingly gloomy economic data. RICS chief economist Simon Rubinsohn said: "Today's cut in the base rate may provide a small boost to the current weak levels of confidence in the economic outlook, but this decision urgently needs to be supported by other measures. There is still a real need to stabilise the economy and increase the supply of mortgage finance to ensure an orderly housing market. The various measures announced by the government should go some way to achieving this providing they are introduced as quickly as possible."

James Thomas, head of residential investment at Jones Lang LaSalle said: “The decision to cut base rates again will be welcomed by homeowners. The market remains extremely weak, transaction volumes are at record lows and house prices continue to fall. Initially, problems in the housing market stemmed from the credit crisis and the drying up in mortgage finance which followed. Now the market is being hit by recession in the economy as well via its impact on jobs, a key factor in determining homebuyer sentiment.”

“Rising unemployment is stifling demand and we expect more house price falls in 2009. The main things to watch for in terms of stabilization in the market will be an unfreezing of the mortgage market and an improvement in the jobs market.”