LONDON, ENGLAND, October 25, 2012 /24-7PressRelease/
-- The Funding for Lending Scheme was launched in September in order to boost lending to mortgage borrowers and businesses who are struggling to get loans. The scheme was launched for banks and building societies to sign up to the scheme to enable them to lend at a cheaper interest rate to house buyers and mortgage borrowers.
The lenders would be able to borrow Treasury bills up to 5 per cent of the amount they lend currently for up to four years and would use the bills to buy money for lending cheaply on the financial markets. The Funding for Lending Scheme is designed to incentivise lenders to boost their lending capacity and the more that they lend the more money they can borrow from the Bank of England at a favourable lower interest rate. The more money a bank lends the less borrowing fee they pay, whereas the less money a bank lends, the higher fee they pay.
Banks who rely on financial markets to finance their loans will be helped by this scheme as will borrowers trying to buy a property for sale
. Because of the higher costs of borrowing on the financial markets in recent years the higher costs have been passed to mortgage borrowers with tighter lending criteria.
It was hoped that because of the cheaper interest rate of borrowing through Treasury bills the scheme would help cheaper lending being passed onto borrowers with more credit being made available overall for mortgages.
However two recent surveys have showed that the lending situation is not improving despite the scheme and also that first-time buyers are still finding it a challenge to get a mortgage because of the high loan to value rate and smaller deposits.
Despite 13 major lenders signing up to the scheme who provides over GBP1 trillion in lending the scheme has failed to make an impact to help more borrowers buy homes. The scheme also allows up to GBP60 billion of Bank of England funding to be made to help more credit become available.
Notes to Editors:
What House? is a leading property website that features thousands of new developments in Kent
, new homes in Suffolk
and across the UK. It also provides the latest property news, valuation of homes and property and mortgage advice. Over the last 31 years, What House? has held their annual What House? Awards, which are the longest established New Homes awards in the UK recognising UK house builders and developers across 21 categories
What House? is a property website portal. For further information go to: http://www.whathouse.co.uk---
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