Commercial property mortgages could fall as low as zero per cent, the Centre for Economic and Business Research (Cebr) has said.
Should this happen, bank lending could increase as would lending to individuals for private mortgages.
The base rate could fall further and stay low noted Cebr senior economist Charles Davis.
“The real reason for that is that we have got a full-on recession, which could lead to deflationary pressures in the system,” he told Mortgages for Business.
Mr Davis commented that inflation is a “real, major risk” and something the country should avoid “at all costs”.
A Reuters poll has revealed that 61 out of 68 economists think the Bank of England’s monetary policy committee will reduce rates by half a per cent to just one per cent.
John Hawksworth, head of macroeconomics at PricewaterhouseCoopers said: “With the economic news looking grimmer by the week, the Bank needs to be able to deploy all the weapons at its disposal.”