The Monetary Policy Committee has cut the UK base rate to 1.5% from 2%, in addition to December’s 1% cut.
The base rate at 1.5% is now at its lowest level since the Bank of England was founded in 1694.
Reacting to the news, James Thomas, head of residential investment at Jones Lang LaSalle said: ‘Although the decision to cut base rates was welcomed, it is not expected to make much difference to UK homeowners in the short-term.
‘Banks are expected to restrict lending further this year and this means life will remain difficult for potential buyers. Furthermore, rising unemployment and uncertainty about job security will see potential buyers very reluctant to commit to any purchases.’
Keith Steventon, head of research at Atisreal, said: ‘If a revival of the investment market were purely dependent on interest rate cuts, we would already be there. Yields are at historic premiums over gilts and swap rates. Yet in December investment was still 24% lower than December 2007, despite £2.5 billion being spent.
'Despite today's MPC cut, it is the system that isn't working. London & Stamford's purchase of 1 Fleet Place is encouraging, but depended upon a financing deal already being in place that can't be replicated in today's market. December's £2.5 billion spend is also encouraging, but the two together do not mark the bottom of the valuation cycle.'