Although most lenders have passed on the cut and reduced their standard variable rates this will only benefit those with tracker mortgages while more than half the borrowers in the UK are on fixed rates.
According to Savills research even if the rate cut filters through to the wider mortgage market, it is a lack of availability of funds that is having the biggest impact on the property market.
Its analysts believe that the biggest issue for the property market remains the extraordinarily low levels of turnover caused by a constrained mortgage market, whilst the cut in interest rates could be key to economic recovery; the key to a housing market is the recapitalisation of lending institutions.
'The best we can hope for in the short term is a reduction in the unprecedented rates of house price falls. Over the medium term it may curb the extent of the downturn although the most likely outcome is that it will improve the prospects of a return to house price growth in 2010/2011,' said Yolande Barnes, Director Savills research.
Most experts agree that further action is needed and are calling for further interest rate cuts. 'This should help to start the process of rebuilding confidence but we suspect that more action will be necessary over the coming months. House prices are likely to continue slipping but homeowners should get some respite in the form of lower borrowing costs,' said Simon Rubinsohn, Royal Institute of Chartered Surveyors chief economist.
It will only help if lenders start lending again, according to mform.co.uk, an on-line mortgage company which allows borrowers to search the whole market for the best products. It wants to see another interest rate cut next month.
'Lenders have cut rates in the past only to take fright at the financial instability. They have to cut again and make it easier for people to borrow. That is the only way to revive the housing market and also boost the wider economy,' said Francis Ghiloni, Marketing and Business Development Director.
'I doubt the half a percent cut will stimulate the housing market immediately but it is a step in the right direction. The stock market's response will be telling for the housing market,' said Chris Baguley, managing director of niche lender Bridging Finance Limited, which arranges bridging loans for property investors.
Stewart Baseley, Executive Chairman of Home Builders Federation, said further action is needed. 'Further action from the Bank of England is also needed if we are to break the vicious downward spiral of sharply lower mortgage lending, falling housing transactions, falling prices and declining home buyer confidence,' he said.