Building societies have seen gross lending up 40% in the first five months of the year and the BSA reckon the scheme will allow societies to lend even more.
Meanwhile the CML says the scheme is likely to act as a positive influence on both the flow and the cost of new lending for customers.
Adrian Coles, BSA director general, said: “Building societies and other mutual lenders are currently very active in the mortgage market so we have been looking forward to seeing the details of the Funding for Lending Scheme. Mutuals have seen strong growth in lending so far in 2012, with gross lending up 40% in the first five months compared to the same period in 2011. In comparison, bank lending was up just 4%.”
The FLS scheme is designed to enable access to cheaper funding than might otherwise be available to banks and building societies to support lending growth. It does not target specific parts of the market such as mortgages, instead being aimed widely at all types of lending to non-financial businesses and individuals. If lenders increase their lending, funding under the scheme is significantly cheaper than if they reduce their lending. So the scheme is designed to provide an incentive for lenders to increase their lending.
The CML says individual lenders will need to assess carefully how well the funding available under the scheme suits their individual funding requirements and lending aspirations. But it adds that the scheme is likely to act as a positive influence on both the flow and the cost of new lending for customers to support growth in the economy.
At the moment though it’s impossible to give a direct estimate of its potential impact on the mortgage market.
CML director general Paul Smee said: "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."
Adrian Coles added: “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."
