Mortgages and loans might become cheaper due to a change in the bank's policy this year and next, as the economic crisis deepens.
The Bank of England is to cut interest rates to 3.25 percent by the end of 2009, Global Insight has predicted.
According to the financial firm, the ongoing economic slowdown caused by the credit crunch will result in the deep cuts to the bank rate - which currently stands at five percent.
Many experts are expecting GDP to go into negative growth before the end of the year, while unemployment rates are already on the rise. Nationwide also became the latest mortgage lender to announce that it would hike its loan deals today, due to the ongoing freeze on inter-bank lending and lack of confidence in the banking sector.
Rate cuts have a stimulatory effect on the economy, as they generally make it cheaper for businesses and consumers to borrow.
Howard Archer, chief European and UK economist at Global Insight, said: "I think the rates will come down to 3.25 percent next year and I wouldn't rule out a further cut before the end of the year.
"I think rates could well be down to 4.5 percent by the end of this year and then down to 3.25 percent next year."
Global Insight's comments chime with those of an expert at the Centre for Economics and Business Research (CEBR). Ben Read, a senior economist, even called for a 0.5 percent cut to the base rate at the next MPC meeting - with further cuts leading to the rate being held as low as three percent by the end of next year.
"Action is needed now and they should be looking at fairly rapid cuts in the near future," Mr Read commented. "Libor is so high, the inter-bank rates are so high and the real interest rate that people are experiencing is actually a lot higher than the Bank of England's rate anyway."
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