Today's cut of 1% puts the UK base rate at 2%, the lowest it has been since 1951 and it has never been lower since the Bank of England was founded in 1694.
But this measure alone, although a sign of hope is unlikely to have any effect on the crisis stricken property sector.
'It will be seen as a much needed comfort to Britain's beleaguered households and homeowners. The rate cut will also be welcomed by the housing industry and will provide yet greater incentive for first-time buyers to step onto the property ladder. But The Bank of England's latest move will not solve all our housing woes although it does sow the seed of hope, especially looking towards next year,' said Neil Chegwidden, Head of Residential Research at Jones Lang LaSalle.
Royal Institution of Chartered Surveyors chief economist Simon Rubinsohn said it was another bold and he expects rates to fall again as significant job losses will be announced in the coming weeks putting further pressure on the economy. 'This is a much needed response to the dramatically worsening conditions across the whole economy. However in our opinion it will not on its own be sufficient to bolster confidence given the scale of the current financial crisis,' he said.
It is unlikely to have much immediate effect on the housing market, according to Liam Bailey, head of residential research at Knight Frank. 'It may tempt some buyers to make a decision but prices will continue to fall into 2009, and we believe they have a further 15% to fall,' he said.
'However, by limiting the extent to which the economy contracts and minimising the level of business failure and job losses, the cut will help to prevent a more serious slump from occurring. Much depends on whether the new rate is passed on to borrowers,' he added.
The National Association of Estate Agents called for major lenders to pass on the cut. 'This cut, in reality, won't do enough unless the banks play fair and pass the cut on to the homeowner,' said Peter Bolton King, Chief Executive of the NAEA.
He also pointed out that lending needs to increase to help the property market. 'Low rates will increase confidence in the market but will not increase mortgage approvals. Bringing buoyancy back to the market lies not only with low interest rates but crucially also in new lending. Government and lenders must do more to encourage first time buyers on to the property ladder in order to reverse the current downturn in the market,' he said.
The Council of Mortgage Lenders also welcomed the move but said that the government now needs to work with lenders to stimulate lending.
The Halifax was the first large lender to announce that it will pass on the full benefit from today's Bank of England Base Rate reduction to all of its existing customers with tracker mortgages.
