UK house prices dived by a record 16.6% during the past year, Britain's biggest building society said today.

The Bank of England is widely expected to cut interest rates this week amid fears that the UK economy is heading towards a recession.

Bank of England rate-setters begin their latest two-day meeting today under increasing pressure to stave off a looming recession.

The British property market showed signs of stabilising last month after figures today revealed a surprise increase in January house purchase mortgage approvals and a hike in remortgaging activity.

Bank of England governor Mervyn King today signalled a hike in interest rates to 6% was off the cards and hinted policy-makers were ready to cut the cost of borrowing if the credit crisis deepened.