Lenders taking advantage of the Funding for Lending Scheme (FLS) actually reduced their borrowing in the fourth quarter of last year, according to new figures out from the Bank of England. Banks and building societies cut their lending by a net £2.45bn between October and December, even though the aim of the scheme when it launched was to unlock the log-jam in credit and help revive the economy.
But is it too early to call whether the FLS is a success or a failure? Bien Media client Mark Harris, chief executive of mortgage broker SPF Private Clients, gives his take on it: ‘Funding for Lending is working but it is principally making already very cheap mortgages for those with bigger deposits cheaper still,’ he says. ‘It is beginning to filter through into some higher loan-to-value products but all the time a lender can fulfil its lending targets at the lower end of the risk curve, it will stay there.’
In other words, we need to watch this space for a bit longer….