The ease with which consumers will be able to cope in 2008 will be dictated by the financial situation they are in, the Council of Mortgage Lenders (CML) said in recent days.

Head of external affairs at the CML Sue Anderson commented that the recent interest rate cut has "clearly" been helpful to homeowners and those looking to purchase property.

She stated that it was "exactly what the market needed" as the cut will support consumer confidence.

Ms Anderson added that it helped to restore belief that the authorities are aware of the situation consumers are in.

Regarding the future, she stated: "If you are a mainstream borrower you are probably looking at rates that are not going to get worse, and may in fact improve. If you are coming off a short-term fixed, you are probably looking at higher rates than you were previously fixed at."

The Bank of England's monetary policy committee elected to reduce the official rate paid on commercial bank reserves by 0.25 percentage points to 5.5 per cent on December 6th 2007.