This further boost to the asset-purchasing scheme means the central bank has now committed to buying a total of £200bn in gilts. The announcement came on the same day that the Monetary Policy Committee (MPC) decided to maintain the Bank base rate at 0.5% for the eight consecutive month.

Chancellor Alistair Darling sanctioned the allocation of extra funds after contact from Bank of England governor Mervyn King.

Despite these latest moves, the mortgage industry has called for further Government action to help the homeloan market and improve consumer confidence. The Association of Mortgage Intermediaries said the changes will support the broader economy, but that more needs to be done to bring the mortgage market back to a more normal size and underpin the stability being seen in property prices.

Ray Boulger, senior technical manager of John Charcol, said the imminent Quarterly Inflation Report would have been a major influence on the MPC’s decision to continue with the quantitative easing programme and that the extra funding was not unexpected.

He added: “The Bank of England has had its foot on the accelerator with quantitative easing and does not want to plunge the economy into reverse by suddenly withdrawing the programme. However, at some stage it will have to sell back the assets (gilts) and it needs to be careful that it does not do this too quickly or we could end up with the dreaded double dip that some economists are predicting.”

Sponsored

Welcome to the future: how collaboration is driving the shift to digital home buying

Sponsored by Halifax Intermediaries

Boulger also stated that he expected interest rates to stay low and inflation to remain under 2% for the foreseeable future.