More drastic action needs to be taken to restore confidence in the financial markets, according to the Council of Mortgage Lenders (CML).

Responding to today's announcement by the Bank of England that the base rate has been cut by 0.25 per cent to stand at five per cent, Michael Coogan, CML director-general said such a reduction is not significant enough.

Although claiming that the base rate cut is "good news" for tracker mortgage customers, he said that further liquidity injections are necessary to improve the market for lenders and increase consumer confidence.

"We would like to see another base rate cut next month partnered with more liquidity auctions, of higher amounts, over longer terms, and available to a wider range of institutions," commented Mr Coogan.

The Intermediary Mortgage Lenders Association echoed his sentiments, claiming that the Bank needs to take "urgent action" and restore liquidity in the UK capital market.

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