House prices are now lower on average than they were a year ago, Halifax, the UK’s biggest mortgage lender, said on Tuesday in a report that invited parallels with the 1990s housing slump and fuelled hopes of a cut in interest rates this week.

Halifax said house prices fell 2.5 per cent in March, taking the quarterly drop in prices to 1 per cent and the quarterly year-on-year growth rate to 1.1 per cent – the lowest in 12 years.