Markets saw extreme levels of volatility during September as the turmoil effecting financial institutions intensified. With banks desperate for funding ahead of the quarter end, but reluctant to lend to each other, lending rates rose. The rate on the ECB's US$30bn auction of overnight funds soared to 11% on 30 September; however, bids of US$77bn were still received. Over the month, sterling three-month LIBOR rose from 5.75% to 6.30%.UK interest rates were held at 5.0% for the fifth consecutive month, although the Monetary Policy Committee minutes later showed that David Blanchflower voted for a half point cut, and that Tim Beasley voted for 'no change' after previously arguing for an increase. Despite annual CPI inflation rising to the highest level in 16 years at 4.7%, weakening macroeconomic data saw expectations for interest-rate cuts increase.UK house prices fell further, with Nationwide reporting that prices fell 1.7% in September, taking the year-on-year fall to 12.4%. Meanwhile mortgage lending for August slumped to just 2% of that seen in August 2007.