Discussing the extension to Funding for Lending, MPC members noted one motivation was to encourage lenders to provide finance to small businesses as well as mortgage borrowers.
However, the minutes continued: “Credit conditions facing households had continued to improve, although quoted interest rates on mortgages had not fallen in recent months as much as the Committee had anticipated at the time of the February Inflation Report.
“The scale of the pickup in lending would depend on how households responded to the improvement in credit supply.
“The loosening of credit conditions for secured household borrowing had not fed through into a pickup in mortgage approvals in quarter one, although other housing market indicators did point to a pickup in housing market activity.”
MPC members remained split on the question of whether the economy needed more quantitative easing. Outgoing Bank of England governor Mervyn King, Paul Fisher and David Miles called an increase in the asset purchase programme to £400bn but were outvoted by their fellow members.
A separate report by the Bank of England published today also noted improving housing market activity although credit criteria remained tight for higher loan-to-value mortgages.
Government-backed incentive schemes had also contributed to the gentle rise in demand for new home purchase over recent months, it suggested: “There were tentative reports that the introduction of the equity loan element of the Help to Buy scheme was encouraging more potential buyers to enter the market.
“It was too early for contacts to reach firm judgements about the scale of the scheme’s effects on either new housing demand or supply — particularly for the mortgage guarantee element to be introduced in January 2014, further details of which were awaited.”
