Wednesday, 12 May 2021 08:58 GMT

Britain switches focus of lending scheme to businesses

(MENAFN - AFP) Britain's state-runned lending scheme will no longer boost mortgage borrowing, the Bank of England said Thursday, amid growing fears over the nation's buoyant property market.

The government's Funding for Lending Scheme , launched last year to boost mortgage and business lending, offers cheap finance to banks in order to encourage loans and boost growth.

But BoE governor Mark Carney said Thursday that it was now appropriate to take measures to ensure the "evolution" of Britain's housing market was "constructive".

"Over the past year the Funding for Lending Scheme has contributed to the recovery by helping to significantly improve credit conditions, especially for households," Carney said.

"The changes announced today refocus the FLS where it is most needed -- to underpin the supply of credit to small businesses over the next year -- without providing further broad support to household lending that is no longer needed."

Finance minister George Osborne agreed it was the right time to concentrate efforts on boosting finance for small companies.

"The scheme proved to be a successful tool in supporting the recovery," said Chancellor of the Exchequer Osborne.

"Now that the housing market is starting to pick up, it is right that we focus the scheme's firepower on small businesses. Small firms are the lifeblood of our economy."

Under the scheme, banks and building societies are allowed to borrow from the Bank of England for up to four years. As security, they will have to provide assets like business or mortgage loans.

However, from January, the scheme will no longer apply to household loans.

Thursday's announcement will not affect the British government's "Help to Buy" scheme, which allows first-time buyers to purchase a house or flat worth up to £600,000 with a deposit of five percent.

Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.