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Today the Bank of England reduced its interest rate by half a percentage point to 0.5%, a level not seen in its entire 315-year history.

At the same time, the MPC also announced plans for the introduction of the unconventional policy of quantitative easing to expand the amount of money in the system by £75bn.

Winkworth hopes that, short term, with more money available in their accounts, the banks will decide to lend more to individuals and help to increase activity in the housing market.

As interest rate cuts fail to feed through to all mortgage products, this new Government initiative may relieve the cost of money, Dominic Agace, Managing Director of Winkworth Franchising Ltd says:

‘A further reduction in interest rates will encourage those with significant equity to purchase property, and is therefore welcome. However, those who can benefit from cheap money fixed for five years remain a relative minority in terms of the traditional property market. Lower interest rates continue to feed through and this has lead to increased optimism in the property market which in turn has increased transactions in 2009. The main obstacle remains the increased cost of standard variable rates when taking up a new mortgage which is preventing people moving. It is evident that to close this gap in the cost of money, more than just cutting interest rates is required now. Therefore, we welcome the launch of new initiatives by the Government to address this, and free up the mass property market.’

Property is now seen as a sound investment, especially by foreign buyers, which the interest rate cut will enhance. The long term risk of quantitative easing is inflation, which also makes purchasing a property a safer option than holding cash assets, Tom Dogger, Franchisee of Winkworth Knightsbridge & Chelsea says:

'We anticipate this further rate cut will create an even greater incentive from individuals with savings to transfer their funds into bricks and mortar. Throughout Central London this trend has already been observed, with unusually high levels of enquiries and viewing activity from both UK and overseas purchasers, keen to become future investors and monopolising on the weak pound.With turmoil in the financial markets, property is being viewed as an increasingly safe option. This trend will guarantee a severe shortage of housing from late 2010 onwards. Once normal lending returns, a lack of supply will ensure rapid price recovery.'

'Furthermore, with Government plans for quantitative easing, there is always a risk of pumping too much money into the economy as the immediate results are difficult to monitor. As a result, inflation or even hyperinflation is a real possibility and anyone with cash assets stand to see the value of these funds diminish. By choosing to purchase property, this future problem can be avoided.'

Alex Thompson, Director of Winkworth Notting Hill, hopes that the rate cut, coupled with quantitative easing will feed though to mortgages and free up bank lending, 'Once again, the word unprecedented becomes common place.With this final rate cut we step yet further into such territory, an action which can only be good for the property market. The lower rates are now feeding through to mortgages on offer and newer products are becoming increasingly attractive.'

'However, lending levels are still lower than we would like to see, which brings us to the other unprecedented and fundamental measure, quantitative easing. Whilst the longer term repercussion of such money supply increases are very much open to debate, the shorter term outcome should see a freeing up of bank lending, helping to maintain the reassuring return of buyers to the market we are currently experiencing in Notting Hill.'