Bank of England issued its latest warning over the economic fallout should the UK vote to leave the European Union next week.
Rates were once again kept on hold at 0.5 per cent today while markets are now pricing in no rises until May 2020.
Some experts warned that the Bank of England could even cut rates towards zero in the next 12 months.
Andrew McPhillips, chief economist at Yorkshire Building Society, said: ‘It is likely that if the UK votes to leave the EU, the Bank will cut base rate in an attempt to stabilise the economy.
‘That said, even if the base rate is cut, mortgage interest rates may increase.
‘Lenders will need to ensure that they remain profitable as wholesale and retail funding becomes relatively more expensive. This is most easily achieved by increasing borrowing costs.
‘Conversely, a vote to remain would most likely mean that interest rates would increase further down the line at a gradual pace depending on future growth in inflation.’
Figures out this week from the Council of Mortgage lenders showed a fall in the number of first-time buyers taking a mortgage in April when they borrowed £3.9billion, down 11 per cent on March but up 15 per cent on April last year. This equated to 25,100 loans, down 9 per cent monthly but 7 per cent year-on-year.
The CML data also showed that home movers borrowed £4.3billion, down 53 per cent on March and 14 per cent compared to a year ago.
Remortgage activity totalled £6billon, up 25 per cent on March and 40 per cent compared to a year ago. This came to 34,800 loans, up 23 per cent month-on-month and 30 per cent compared to a year ago.
The slump in lending for house purchase was put down to the surge in borrowing in the first three months of the year as buyers rushed through purchases ahead of the 3 per cent stamp duty surcharge being brought in on buy-to-let and second home purchases.
But some have suggested there is also reason to believe many are holding back purchases until after the 23 June referendum.