New Funding for Lending scheme set to boost the mortgage market

The Treasury and the Bank of England has launched a new Funding for Lending scheme to enable access to cheaper funding than might otherwise be available to banks and building societies. This is part of the ongoing plan to support lending growth. Funding for Lending does not target specific parts of the market such as mortgages, instead it is being more widely aimed 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. Almost 100 banks are involved in discussions over the government's Funding for Lending scheme. George Osborne, Chancellor of the Exchequer, is quoted as saying: “The Treasury and the BoE are taking coordinated action to inject new confidence into our financial system and support the flow of credit to where it is needed in the real economy - showing that we are not powerless to act in the face of the eurozone debt storm." July 20, 2012