Building societies and new banks deliver on FLS
Cumulative net lending from the 25 building societies in the scheme was £5.3bn while the five new banks, Shawbrook, Aldermore, Virgin Money, Tesco and Metro contributed £2.4 billion. However Bank of England figures showed their total withdrawals under the scheme were £3.1bn compared to £10.8bn from established banks which reduced net lending by £9.24bn.
Sean Oldfield, chief executive officer of Castle Trust, said: “Most of the established banks have corporate restructuring issues to deal with and the FLS figures do not necessarily tell the whole story about their mortgage lending.
“However it is also clear that building societies and new challenger banks are delivering on the promise of Funding for Lending with substantial rises in net lending and competitive products.”
Building societies that have substantially increased net lending include the Buckinghamshire which recorded a 15.7% rise in loans while Coventry increased loans by 4.7% relative to its base stock.
New banks also recorded substantial rises with Metro Bank more than doubling lending with a 118.8% rise while Virgin Money saw a 7.2% increase and Tesco Bank an 11.8% increase.
Aldermore saw its loans rise by 30.6% and Shawbrook by 37.7%. By contrast the only established bank which saw a rise in net lending relative to its base was Barclays with a 3% increase.
Castle Trust, which enables lenders to increase lending while also preserving capital through its shared equity Partnership Mortgage, believes the success of FLS is heavily dependent on building societies and new banks as well as a commitment to further innovation in the market.
Oldfield added that further innovation is crucial to help the challenger and established banks to build momentum in the mortgage market and maintain the recovery that is emerging.