Interest rates, which currently stand at 5% are expected to be cut a quarter of a point to 4.75% in the next few days. Experts have been warning for some time that the rates will need to be cut dramatically in order to stimulate lending with some saying a cut to 4% may be necessary.

A drop in the interest rate usually correlates with the willingness of banks to lend money and the ability of consumers to pay back existing debt.

There has been a word of caution from some figures within the industry though with many pointing to the lack of liquidity in the system being more problematic than the interest rate.

Housing developer Alan Cherry explained that more needed to be done to help the market bounce back:

"I think the supply of credit in the market is a far more significant problem at the moment and I'm not sure lowering the rate of interest will have much of an impact on that. The government has tried to do a few things about it, but the financial system needs a bigger shock in the arm.