The Bank of England has once again cut interest rates in a hope to stimulate the property market, but it still may not be enough. The cut in interest rate was welcomed throughout the property industry but analysts believe this won’t be enough to stimulate the market. 

The interest rate was cut by 1% making the base rate 2%, this ultra low rate is the lowest since 1951. This low rate signifies the trouble the economy is in. It was announced yesterday that new car sales are at their lowest for 28 years. 

The rate cut is hoped to comfort homeowners and provide greater incentive for first-time buyers to get on the ladder. If you can get a mortgage it could be a great time to buy with property prices lower than they were last year. 

This rate cut may not be the last the chief economist Simon Rubinsohn from the Royal Institution of Chartered Surveyors says he expects rates to fall again as businesses throughout the UK announce further job losses. 

This rate cut is unlikely to have an immediate effect on stimulating the housing market particularly with Christmas round the corner. People have the holidays on their minds. Plus savvy first time-buyers will hold back a little while longer as house prices are expected to continue to fall in 2009 by up to another 15% according to Liam Bailey, head of residential research at Knight Frank. 

The effect the rate cut has on the economy also depends on whether the lenders pass these rates onto borrowers. The banks need to increase lending in order to get the property market going again. Lower rates will make mortgages more attractive but without an increase in approvals the market will remain slow. 

The Halifax has already announced that it will pass on the full benefit from the Bank of England Base Rate reduction to all of its existing customers with tracker mortgages. 

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3. Home Sales Lowest Since 1978
4. Home Loans
5. News 19th June 2008