UK interest rates should be cut to 3.5% by the end of next year, the International Monetary Fund (IMF) has recommended.

Such a move could see the Bank of England cut its key rate by up to seven times from its current level of 5.25%.

But many estate agents are hopeful that rates will be reduced this summer – a move that would help revitalise buyer market activity.

A new survey of more than 600 agents  found that while 31% have seen an increase in buyer enquiries so far this year versus last year, 34% have observed the same level of market activity, while 35% have seen a reduction.

Some 85% of those surveyed believe that its higher mortgage rates that have dampened buyer market activity, with 79% stating that the issue has persisted due to the Bank of England’s decision to keep rates held at 5.25%.

The latest Gov figures, released last week, show that inflation has fallen to its lowest level in almost three years and, at 2.3%, sits close to the Bank of England’s target rate of 2%.

However, while a rate cut was widely expected this summer, April’s inflation figure came in higher than expected, denting hopes that we could see a cut in June.

But the majority of agents surveyed believe a cut is what’s needed to boost buyer interest, with 83% believing that when rates do come down, more buyers will be enticed back to the market.

The study also found that 82% of agents believe that a rate cut would help spur more buyers into making offers on properties.

But when it comes to the price they are willing to pay, agents remain split. Just over half – 52% – believe that more buyers will offer a higher percentage of asking price compared to the current market if rates do come down, with 48% believing that they will continue to offer the same.

Colby Short, co-founder and CEO of GetAgent.co.uk, which commissioned the study, commented: “Transactions so far this year have been at their lowest levels since 2013. The number of listings has remained quite high but properties have not been selling at the rate they have over recent years.

“This has been a double serving of trouble for agents as they have had to pay to acquire the same number of listings, pay for photos, pay to market the properties but are not generating the same revenue.

“It’s great to finally see light at the end of the tunnel. May’s transaction numbers increased year on year and, with inflation falling, cheaper lending appears to be on the horizon. It can’t come fast enough for the property industry!”