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Funding for lending boosts mortgage advances

paulajohn
Written By:
paulajohn
Posted:
Updated:
02/09/2013

Banks and building societies using the Funding for Lending scheme increased their mortgage provision in the second quarter.

According to the Bank of England, those lenders accessing cheap Government money have been passing it on to mortgage borrowers in the form of competitively-priced mortgages.

This was the aim of the scheme which was set up a year ago.

Net lending by the 41 banks and building societies which used the funding for Lending scheme was up by £1.6bn during the second quarter of 2013. However, the gross figure over the year was down by £2.3bn.

“The FLS is continuing to support lending to the UK economy with a range of indicators suggesting that credit conditions are steadily improving for households and firms, and FLS participants collectively expect net lending volumes to pick up over the remainder of this year,” said Paul Fisher, executive director for markets at the Bank of England.

However, the Bank of England’s figures show that the UK’s biggest banks did not take advantage of the cheap funds available through the scheme in the second quarter of the year, with Santander choosing to repay £900m of the money it had previously borrowed from the scheme.

Lloyds Banking Group increased its net lending in the second quarter of 2013, but its net lending has fallen in the last 12 months – which means it has received more repayments than it has lent out in new loans.

Santander and RBS also saw net lending fall over the past year. Barclays and Nationwide increased their net lending over the same period.