The cost of borrowing is down, but house price declines will continue in many areas. However, the trend towards lower interest rates should mean that recovery arrives rather earlier than expected, probably in 2011.

This statement (spoken in a resigned tone) summarises the consensus of opinion after the base rate cut. But, as the extraordinary events of past days have shown, nothing is quite as it seems. In the same way that seemingly stolid high street banks have been revealed as reckless speculators, the housing market, although generally in the doldrums, has some areas of surprising activity, a few of them the direct result of the troubles at some banks.

The first of these is the Icesave effect, otherwise known as the “Somehow I feel safer in property than in a savings account” effect. Although the Government has pledged that none of the 300,000 UK depositors in Icesave, the Icelandic bank, will lose money, its failure has spooked savers already unnerved by Lloyds TSB's takeover of HBOS and other evidence of the embattled state of some high street names.

Some observers argue that the perceived threat to deposits from bank instability has spooked the nation much more than house price falls, which were widely forecast. This sense of unease over savings has not been entirely assuaged by the new, higher £50,000 compensation guarantee limit for savers - or, indeed, by the £500 billion bailout of the banking industry. Estate agents report that some buyers of both decrepit and deluxe properties are now saying that they see property as a safer investment than a savings account, even though they also admit that they expect the market could subside further, as the jobless numbers rise. These buyers seem not to care if they have to wait until the Olympics in 2012 for prices to rebound.

Robert Billson, director of Savills' Nottingham office, was told by one client: “I would rather put my cash into a boarded-up terrace and wait for the recovery than get involved with Icesave, or anything like it.” The Icesave effect underlines the influence that cash buyers are now having.

They are - often ruthlessly - exploiting their purchasing power, knowing that other aspiring purchasers are struggling to obtain mortgages, despite the base rate decrease and the £500 billion bailout. This has led to the double gazunder effect, where the brazen cash buyer forces not one but two price decreases. The antics of the gazunderers have led Cluttons, the estate agents, to impose strict timeframes on buyers, obliging them to instruct solicitors and surveyors by certain deadlines. The agreed price cannot be renegotiated.

After Wednesday's announcement of an emergency half-point base rate decrease, Robert Bartlett, head of Chesterton, the estate agent, called on the banks to “open the lending doors to new buyers and to those needing to remortgage” and so fulfil the conditions of the £500 billion bailout, given on the understanding that loans would become more plentiful.

But, within hours of the base rate reduction, Cheltenham & Gloucester, part of Lloyds TSB, withdrew tracker loans, which would have been most attractive to first-time buyers and anyone remortaging. It seems that C&G did not want these types of would-be borrowers to benefit from such deals - so called because they track the direction of the base rate, which is now definitively downward. About 4.2 million existing borrowers with tracker loans may now be paying less thanks to the base rate cut, but it seems that lenders would prefer to limit the numbers of such low-profit-margin customers.

Other banks may also prefer to keep their doors barred against first-time buyers and anyone else without a substantial deposit. For the moment, the date when the market begins to return to health - 2010? 2011? 2012? - remains a matter for conjecture, while lenders increasingly hark back to the 1970s, when a mortgage was more a privilege than a right.

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