Interest rates this week remained on hold at 4.5%, however some economists are now suggesting that interest rate cuts could be imminent.
"I expect to see at least two quarter point reductions in base rate this year and house prices to rise by about 5.5%," said Ray Boulger of mortgage adviser John Charcol.

"The housing market is a critical driver for the economy and, whilst a lower base rate is likely to be needed to improve consumer confidence, base rate at or a little below 4% should not cause overheating of the housing market."

An improving housing market is why the Bank opted not to raise interest rates, accordig to Trevor Williams, chief economist at Lloyds TSB. He said: "Hopes of a recovery in consumer spending have been pinned on the housing markets return to health and the MPC will be keen to see the modest rise in property prices continuing."

He added: "However, the trick for the Bank of England will be to stimulate a rise in house prices which is modest enough to help consumer spending but which prevents the return of another boom that could be potentially destructive for the economy."