The Council of Mortgage Lenders welcomes the publication of further information today about how the "funding for lending" scheme from the Bank of England will work.
The scheme is designed to enable access to cheaper funding than might otherwise be available to banks and building societies to support lending growth. It does not target specific parts of the market such as mortgages, instead being aimed widely at all types of lending to non-financial businesses and individuals. If lenders increase their lending, funding under the scheme is significantly cheaper than if they reduce their lending. So the scheme is designed to provide an incentive for lenders to increase their lending.
Individual lenders will need to assess carefully how well the funding available under the scheme suits their individual funding requirements and lending aspirations. In aggregate, the scheme is likely to act as a positive influence on both the flow and the cost of new lending for customers to support growth in the economy. But it is not possible to give a direct estimate of its potential impact on the mortgage market specifically.
CML director general Paul Smee comments:
"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 impacts for mortgage lenders."
NOTES TO EDITORS
1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 95% of all residential mortgage lending in the UK. There are 11.3 million mortgages in the UK, with loans worth over £1.2 trillion.
2. Details of the "funding for lending" scheme can be found on the Bank of England website.
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