Last week the Bank of England published more information about the "Funding for Lending" (FLS) scheme. FLS is a new multi-billion pound scheme “designed to make more, and cheaper, loans available to individuals and businesses".
The idea behind FLS is that the Bank of England will make low-cost funds accessible to building societies and banks, tackling the rising cost of borrowing and the subsequent drop in lending. Since its peak in 2008 lending has dropped by 16 per cent though SLA is focused on many types of lending not just mortgages.
Director-General of the CML observed:
"While it is difficult to say exactly what its impact on the mortgage market may prove to be, the "funding for lending" scheme seems likely to encourage lending in its widest sense and to that extent should be a helpful support to economic growth. We will continue to look at the detail to identify any specific imapcts for mortgage lenders.
Commenting on the launch, Adrian Coles, Director-General of the BSA, said:
"Building societies and other mutual lenders are currently very active in the mortgage market so we have been looking forward to seeing the details of the Funding for Lending Scheme (FLS). Mutuals have seen strong growth in lending so far in 2012, with gross lending up 40% in the first five months compared to the same period in 2011. In comparison, bank lending was up just 4%.
Mutuals are keen to continue to play their part in supporting homebuyers, and we will be studying the details of the scheme carefully. We are encouraged that the scheme incentivises those firms, such as mutuals, that are already increasing their lending, to expand further. We look forward to working with the Bank to ensure that mutual lenders of all sizes that want to participate in the FLS are able to do so."
In order for FLS to succeed the savings will need to be passed on to consumers. Encouraging a return of consumer confidence is very important and the cheaper loans need to be accessible to those homebuyers who need it most, across all LTVs.
Conveyancers can merely hope that this latest scheme will help more people move home.
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