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Funding for Lending scheme: All the industry reaction

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  • 13/07/2012
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Funding for Lending scheme: All the industry reaction
Earlier today, the Bank of England unveiled details of its £80bn Funding for Lending scheme.

Mortgage Solutions brings you reaction all the reaction from the industry.

 

Brian Murphy, head of lending at Mortgage Advice Bureau (MAB):

 

“MAB welcomes the Funding for Lending Scheme. Despite having pumped £375bn into financial institutions through quantitative easing this has not translated into increased lending to UK households and businesses.

The Bank of England and the Treasury need to boost lending in the real economy and this scheme has the potential to solve the problem.

“By making cheap funding available specifically to lend to individuals and business, and by penalising those who fail to lend in the future it should help to free up more credit.

“Borrowers have been crying out for more mortgage funding, as lenders’ own funding has been more constrained. But while this scheme could mean up to £80bn is available to banks and building societies, we also need to see more flexibility being applied. We need to see more good quality borrowers getting access to mortgage funding if the scheme is to have the positive impact the Government is hoping for.”

 

Paul Smee, director-general of the Council of Mortgage Lenders (CML):

 

“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.”

 

Christopher Shaw, CEO of the alternative finance providers Platform Black:

 

“After months of handwringing about the lack of lending going on, the Bank of England has put its money where its mouth is. It’s a lot of money too with the first allocation expected to be worth at least £80bn.

Such a big stimulus to the lending sector is more than just a shot in the arm. It’s also a wrap across the knuckles, and a confirmation of what thousands of small business owners and house buyers already know only too well – not enough credit is being made available to keep the wheels of commerce turning.

For all the Bank of England’s QE largesse, precious little of the newly created money is getting through to the real economy. The jury is still out, but there is growing evidence to suggest that QE is not working, or at best is disappearing into banks’ balance sheets and not reaching those who need it most. For the economy to start growing in earnest, SMEs need to grow, and to grow they need funds. Currently, those funds simply aren’t there.

The engine of the economy needs fuel but it’s simply not getting it. This scheme is a worthy step in the right direction, but it’s no panacea.”

 

Andrew Montlake, communications director at Coreco:

 

“You’ve got to welcome this kind of initiative, whether or not banks will take advantage of it is another matter but at least it does show that the Bank of England are doing something and trying to help. The actual terms of it seems a lot more than what was set out with Project Merlin. I am cautiously optimistic that we will see some lending advantages of the Funding for Lending scheme. I think that the majority of the £80bn will probably go to SMEs but that in turn should still help the whole economy.”

 

Adrian Coles, Director-General of the Building Societies Association (BSA), said:

 

“Mutuals are keen to continue to play their part in supporting homebuyers, and we will be studying the details of the scheme carefully. We are encouraged that the scheme incentivises those firms, such as mutuals, that are already increasing their lending, to expand further. We look forward to working with the Bank to ensure that mutual lenders of all sizes that want to participate in the FLS are able to do so.”

 

A spokesperson for the Royal Bank of Scotland:

 

“We welcome the scheme and the opportunity to provide cheaper finance for our customers, and will release details shortly. RBS already lends more to UK businesses than any other bank and helps thousands of buyers into new homes each year – we hope this scheme helps us build on that success.”

 

Stewart Baseley, executive chairman at the Home Builders Federation (HBF):

 

“This is a positive move. A lack of lending for individuals and businesses has been the main constraint on house building in recent years, making Britain’s housing supply crisis even more acute. However the success of the scheme is in the hands of the mortgage lenders.

“If they take advantage of the FLS and reflect its lower funding costs in lower mortgage rates, then we should see an increase in new home buyers. This in turn will bring a much-needed increase in economic activity and create tens of thousands of jobs across the country.”

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