The number of people seeking to buy a home surged to a two-year high last month as bargain-seekers searched for repossessed and forced-sale properties at bargain-basement prices, new figures suggest.

However, the increased level of interest from potential buyers was not enough to perk up the dire situation in the housing market, with the number of sales slumping to a new 30-year low between September and November.

Estate agency branches sold an average of 10.6 houses each in England and Wales in the three months to November 30 - less than one house a week. That figure was down from 10.9 houses in the three months to October 31, a survey from the Royal Institution of Chartered Surveyors (RICS) showed. That is the lowest figure recorded since RICS began its survey in 1978.

As sales of houses fell, the prices that they achieved also continued to decline during the month, although the proportion of agents reporting price falls eased slightly. About 76.5per cent more surveyors reported that prices fell rather than rose in November, compared with 81 per cent in October.

In a symptom of the worsening outlook for house prices, which have already fallen by 18 per cent since the market peaked in summer last year, the Council of Mortgage Lenders said yesterday that it would not produce its annual forecast for house prices. The CML, which represents 98 per cent of residential mortgage lenders, said that prices would fall again next year but that the low level of transactions made it difficult to forecast how far.

Some experts said the decision could have been taken in an attempt not to talk down the market. Some economists have forecast that house prices could fall a further 15 per cent next year. One glimmer of hope in the grim RICS figures was the rise in the number of inquiries from new buyers, with more surveyors reporting that inquiries rose, rather than fell, for the first time since October 2006.

Inquiries rose sharply in the South West and the West Midlands but buyers in London and the East Midlands were still scarce, surveyors said.

There are hopes that Government plans to allow borrowers who fall into difficulties a two-year holiday on paying interest on a portion of their mortgage could reduce the number of distressed sellers, slowing the pace of house price falls. But Simon Rubinsohn, an RICS economist, said that could serve to depress the number of transactions further. House prices have been dragged down by the drought in the mortgage market, with lenders demanding large deposits.

There was a further blow to potential buyers as Lloyds TSB, which has received billions in taxpayers’ money, raised the rates on its tracker-rate mortgage deals by up to 0.4 percentage points, despite last week’s 1 percentage point cut in interest rates.

HSBC pledged to increase mortgage lending next year to £15 billion, 20 per cent above this year’s level.

But the misery for homesellers was compounded as the Government announced that its controversial Home Information Packs (HIPs) will be mandatory as soon as homeowners put their house on the market from April next year.

At present, sellers can market their home for 28 days without a HIP, which provides buyers with property information and costs about £300 to produce, if they have ordered one.

Northern Rock is the latest government-supported lender to cut its variable mortgage rate by less than one percentage point. Yesterday it announced a half-point cut in its standard variable rate to 5.34 per cent.

As reported in Times Online - Gráinne Gilmore and Rebecca O’Connor

Fridays interest rate reduction should have an impact on most mortgage holders. The Bank of England cut interest rates by a further 1 per cent, which will bring monthly repayments down for those borrowers with tracker mortgages . However, many lenders have not reduced their rates as of yet.

Many borrowers however will not feel the benefit of the rate cuts as those on tracker mortgages will see major banks applying a ‘collar’ to their rates.  This is known as a minimum pay rate which is a part of your mortgage small print and prevents borrowers rates dropping below a certain amount.

Many tracker mortgage collars are initiated at 3 per cent. Some mortgage market experts indicate that as many as 600,000 tracker customers will not benefit from the rate cut at all.

Many lenders have already reduced their standard variable rates following previous rate cuts.  It is not yet known whether they will again lower the SVR to meet the current base rate.

The Bank of England’s Monetary Policy Committee (MPC) has cut interest rates by 1% to 2%, their lowest level since 1951.The reduction follows a huge 1.5% cut last month and a 0.5% decrease in October in an emergency move co-ordinated with other central banks.

Adrian Coles, director-general of the Building Societies Association, said: “Homeowners will welcome the decision to cut the Bank Base Rate to 2%. However, not all mortgage borrowers will find the fall mirrored by their lender - building societies have to balance the interests of borrowers and savers. Although low interest rates are good news for borrowers, they are not so good for savers.”

Karen Barrett, marketing director at Impartial, said: “The cut will certainly be good news for those currently on tracker mortgage deals as they will probably see their repayments continue to decrease.

“We anticipate that pressure from the Government will also result in lenders passing on this rate cut so those mortgage holders on a standard variable rate mortgage.

“For those looking to buy or remortgage – especially all those on fixed-rate deals who won’t have seen the benefit of recent rate cuts – it may become harder to find competitive deals as lenders tighten their lending criteria and limit their attractive tracker and fixed-rate deals as LIBOR rates fail to keep pace with the Bank Base Rate.”

More than four million home owners on tracker mortgages are unlikely to benefit from there full cut because of so-called collars – whereby lenders no longer have to pass on interest rate reductions once the Bank of England base rate falls below a certain level.Around five million existing mortgage borrowers are on fixed-rate deals and the remaining 150m are borrowers on lenders’ standard variable rates. Yet many lenders have been slow to react to the recent rate cuts.

More than 75pc of mortgage lenders have already failed to pass the 1.5pc cut on in full to their standard variable rate (SVR) according to research by Moneyfacts.co.uk before today’s announcement by the Bank of England.

But some borrowers will benefit. Lloyds TSB has announced that it will cut its SVR to 4pc from January, while Halifax has said its SVR is under review.

The smallest cut in response to the total combined 2pc cut in October and November was 0.3pc from Scarborough Building Society and there is now an unprecedented spread of 2.25pc between the lowest and highest Standard Variable Rate (SVR), with Nationwide being lowest at 4.69pc and Scarborough (soon to be taken over by Skipton) highest at 6.94pc.

Ray Boulger at John Charcol borrowers may have received the news of another significant rate cut with hope, I expect very few lenders to pass on the whole of this month’s cut, with most reducing their SVRs by between just 0.25pc and 0.5pc. Some who were coerced by The Government into passing on all of last month’s 1.5pc cut against their better commercial judgement may choose to be parsimonious this time, unless there is further Government browbeating.”

Many lenders which withdrew tracker mortgages straight after the last cut have not replaced them and are unlikely to do so in the near future, particularly if base rate is cut again.

Last night, Cheltenham & Gloucester withdrew their tracker mortgage products ahead of the base rate decision.

A spokesman said: “Until we know the Bank of England’s base rate decision we are temporarily withdrawing all our Tracker products from the market – with a view to relaunching early next week once we know the impact of the base rate decision on wholesale funding costs.”

Melanie Bien at Savills Private Finance, said: “The cut was expected and shows just how concerned the Bank is about the economy and undershooting the inflation target. However, not all borrowers will benefit. Lloyds is cutting its SVR by the full amount and some lenders will follow but not all, particularly the smaller building societies who can’t afford to.

“There will also be some concern for savers and protecting their interests. While it will bring relief to borrowers on trackers, it won’t suddenly encourage lenders to start lending again, nor ease criteria on deals.”

Kara Gammell - Telegraph