Economists are doubtful that the Bank of England will cut the base rate in July after leaving it standing at 5% when the committee met earlier this month.

Reuters news agency took a poll of what economists were predicting would happen with interest rates and the majority are expecting rates to be held following the next Bank monetary policy committee meeting. However there is roughly a one in three chance that interest rates will be cut from 5% to 4.75%.

Expectations that the cost of borrowing will fall in the coming few months has diminished after house prices fell yet again last month, the biggest drop in 15 years.

At the same time the International Monetary Fund has warned that there is a perfect storm forming ahead for the economy, with oil prices going up and the credit crunch taking its toll on the economy. Bank of England governor, Mervyn King, and the Council for Mortgage Lenders are both warning that mortgage lending could completely dry up in the coming year.

In the last six months, first time buyers and would-be home movers have found themselves struggling to find an affordable mortgage, or even any type of home loan at all, as lenders pull multiple products from the market.

Whilst there is massive pressure on the Bank of England to cut interest rates in order to alleviate the pressures on the UK economy, its hands are tied because of the fact that the Consumer Prices Index inflation recently rose above the government’s self imposed target of 2%. Dealing with inflation is currently a priority for the government.

Meanwhile, debt charities are reporting record numbers of homeowners seeking advice on home repossession, bad debts and simply making ends meet.

Many people are struggling to meet repayments on personal loans, credit cards and utility bills. Where once these debtors would have sought to consolidate their debts over a longer period, now the debt consolidation loans they need are just not available, or are offered at such high rates that they offer no relief at all.