The Bank of England's monetary policy committee (MPC) will reduce the base rate even further this week, it has been predicted.

Howard Archer, chief European and UK economist with IHS Global Insight, anticipates a reduction of 75 basis points, taking the figure from two per cent to 1.25 per cent.

Mr Archer added that an even greater cut is possible and said that it "seems a stone dead certainty"that the rate will go down on Thursday, which could impact on the mortgage payments of private landlords.

"With the recession deepening, credit conditions remaining worryingly tight and inflationary pressures retreating sharply, there is intense pressure on the MPC to bring interest rates down sharply further,"he commented.

Mr Howard also predicts deflation to occur this year and says it is even possible that the interest rate could reach zero per cent.

Meanwhile, the Building Societies Association has reported that gross mortgage lending in November 2008 was worth £2,595 million, down from £4,070 million in the previous year.

Its director general, Adrian Coles, acknowledged that the housing market is "depressed"but said that statistics from the past three months suggest it is not getting worse.ADNFCR-2002-ID-18956621-ADNFCR

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