Why the pain may be worthwhile

This week's base rate cut - the sixth already this year - is unlikely to be the last. The money markets are already discounting a further 0.5% fall, to 4%, by the end of this year or early next.

That will take the Halifax main rate to around 5%, and Nationwide's to just 4.75%. These are incredibly low figures. In 1990 Halifax was charging 15.4%, which in real terms meant that a £70,000 mortgage cost around £800 a month after tax relief. Even after the loss of tax relief, a 4.75% rate means that an interest-only mortgage will come in below £300 per month.

Property experts will hail the figures as firm underpinning against a recession-inspired crash. Talk of price falls is nonsense, they confidently predict.

But be cautious about what these experts say. The majority are in the pay of mortgage lenders or estate agency companies who have a vested interest in the property market merry-go-round. And why is it, by the way, that economists regard inflation as a terrible thing, except, er, in the property market?

A rapid rise in unemployment -and Wednesday alone saw announcements of jobs cuts totalling 15,000 - will badly upset the rosy predictions. Once confidence in job security is shattered, no amount of rate cuts will keep the property market afloat.

But what the latest cuts may do is inspire another round of re-mortgaging, and this time it won't be transfers off a standard variable rate across to a discount rate. As little as 18 months ago 6%-7% fixed rates were common. The coming months may be the time to face the pain of penalty clauses and switch out of these expensive fixes.