Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

Funding for Lending Scheme on the up

by
2nd Sep 2013
Save content
Have you found this content useful? Use the button above to save it to your profile.

Lending by banks and building societies participating in the Funding for Lending Scheme (FLS) has improved, according to the latest Bank of England figures.

The bank said net lending grew by £1.6bn in the second quarter of the year; however participating banks had actually cut lending by £2.3bn since June 2012.

Paul Fisher, executive director for markets at the Bank of England, said: “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.”

The new data showed that the initiative was continuing to boost the mortgage market amid wider fears of another housing bubble being created by government schemes such as the Help to Buy initiative and the FLS.

Mortgage approvals for house purchase edged higher in the second quarter suggesting that lending to individuals is likely to increase further.

However total net lending to businesses remained negative in the period, although small and medium-sized businesses fared better than large corporations.

“Going forward, SME credit conditions should be supported by the extension to the FLS announced in April, which provides additional incentives for participants to increase lending to SMEs both this year and in 2014,” the Bank said. “A large proportion of FLS participants have indicated their intention to participate in the extended Scheme.”

Since it opened last August banks have drawn down £17.6bn of cheap funds from the scheme.

The largest net lenders between March and June this year were Nationwide, Lloyds, Barclays and Virgin Money.

Adam Tavener, chairman of Clifton Asset Management said there was evidence that long-term confidence was returning to the SME sector in general and in its approach to funding in particular.

But he added: “Even though the FLS is in itself failing to increase lending, what we have been seeing with pension-led funding for some time is an overall desire from small business owners to move forward and start driving growth in the UK.”

“This is further underpinned by the BoE’s commitment to long-term interest rate stability and indications that it would potentially sanction the freeing-up of further bank lending reserves. This is backed by an extremely healthy alternative funding sector – including crowdsourcing and peer-to-peer lending – which has given business owners greater confidence in seeking finance for their companies,” Tavener said.

Tags:

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.