The Bank of England's monetary policy committee's decision to cut the base rate of interest to 4.5 per cent has been welcomed by the Royal Institution of Chartered Surveyors (Rics).

Commenting on the move, the organisation said that the Bank's "dramatic" step was an "appropriate response" to recent financial market turmoil.

"This should help to start the process of rebuilding confidence but we suspect that more action will be necessary over the coming months," Rics asserted.

Interest rates in the UK are expected to fall to 3.5 per cent mid-way through next year, it stated, adding that homeowners could soon benefit from lower mortgage borrowing costs.

Already this week several mortgage lenders have taken the opportunity to reduce their rates.

Barclays, Lloyds and Halifax were among the financial institutions to cut their mortgage rates in light of the 0.5 per cent cut in the base rate.

Each announced that their own rates would be reduced by the same level as the Bank rate.