More lenders sign up to FLS

Sarah Davidson

October 30, 2012

There are now 30 lenders able to benefit from the government backed lower funding including many building societies, The Co-operative Bank, Clydesdale and Tesco Bank.

The Bank of England said the lenders involved – which include RBS, Lloyds Banking Group, Nationwide, Barclays and Santander – now account for 80% of the UK’s lending to households and businesses to the end of June 2012.

It means these lenders can borrow up to 5% of their collective £1,325.6bn existing lending from the Bank of England under the scheme – plus any expansion of lending during the period between July 2012 and the end of 2013.

The Treasury hopes the scheme could pump a further £80bn in extra credit to businesses and households.

Peter Williams, executive director of the Intermediary Mortgage Lenders Association, said he hoped the Bank of England would decide to widen its remit to include non-banks soon.

He said: “Despite a slow start, since its launch in August there are now 30 lenders signed up to the FLS scheme, and more than half of these are building societies. The Bank of England is clearly keen to make the FLS as inclusive as possible.”

Williams warned that the FLS is unlikely to make a significant impact on lending volumes until 2013 and to date it has only had limited effects on volumes and pricing, but he said this will build up over time.

And he added: “IMLA has been very concerned that lending in 2012 and 2013 would remain well below market needs, given the pressures on lenders flowing from tighter regulation, more demanding capital requirements, and the costs of raising funds from the retail market.

“However, the FLS will help ease this and it has also been a factor in allowing a wider spread of lenders to raise funds in the securitisation market.

“Overall the Bank announcement points up the progress made to date. There is no overnight cure but we are at last seeing positive signs on the funding front and that will slowly feed through to the housing and mortgage markets.”

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