Property experts in the West Midlands welcomed the radical rate cut by the Bank of England, saying it could be a shot in the arm for the stagnant housing market.
But they said the market would be holding its breath and waiting to see whether lenders would be willing or able to pass on the rates cuts to buyers currently unable to get a mortgage.
Harvey Williams, the regional spokesman for the Royal Institute of Chartered Surveyors, said: “The housing market in the West Midlands has been hamstrung by a logjam of people who can’t find mortgage funding. This move shows the Monetary Policy Committee is recognising the severity of the effect on the economy of the housing recession.
“There’s no doubt that the health of the housing market in the West Midlands is inextricably linked to the welfare of the economy.
“That’s been proved by the effect the credit crunch has been having.
“This will be enough to kick-start mortgages as long as the business rate reduction is passed on by the lending people to potential applicants for mortgages.”
Mark Swallow, head of the Birmingham office of property company Knight Frank, said the banks would find it hard to refuse the Bank of England’s desire for them to pass on the rates to their customers.
He said: “How the banks will react will be interesting, but the size of the cut will put pressure on them. If it had been anything less than this they may not have passed it on, but they will find this much will find it hard to refuse.
“The first thing is there will be stabilisation in the housing market, and that’s the most important thing – to get the market moving and get people so they are able to buy.”
And Tim Haywood, the finance director of St Modwen, said he had been surprised at the lengths to which the Bank was willing to go to take action over the housing market.
“We were surprised to see such radical action,” he said. “The sensible money was on half of one per cent and the brave money was on one per cent.”
“They are recognising the extent to which there is a need for robust action.
“We have been rather late as a country to recognise the downturn and I think belatedly we are recognising the economic situation is here, and it’s a brave move to try to kick-start the market and stimulate buying.
“I think we feel that the housing market is at or near to the bottom in terms of levels of activity, although that’s not necessarily to say in terms of price.
“Maybe now’s the time for bargain hunters.”