The Bank of England has cut interest rates to 0.5% - a fresh all-time low - and said it was now boosting the money supply to help revive the economy.
Interest rates have now been reduced six times since October, and the latest half a percentage point cut from January's 1% had been expected. The Bank also said it planned increase the amount of money in the system by £75bn in an attempt to boost bank lending This policy is called quantitative easing.
Simon Gammon, Managing partner at Knight Frank finance said: ‘There are signs that conditions in the wider market are beginning to improve, although the private banks are becoming far more selective in the customers they offer mortgage finance to. Elsewhere, there are now fixed rate deals available at sub 4%, and we are encouraging clients to pursue these options now.
‘There is an increasing belief that inflation may become more of a factor in the medium term, particularly with the Bank of England now committed to quantative easing, and rates may actually increase towards the end of the year.’
* More news on the property market and house prices
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