Launch of scheme to increase bank lending

A new initiative to increase bank lending to homeowners, home purchasers, and businesses, has been launched, with some of the biggest lenders already cutting the cost of some of their deals in response.

The 'Funding for Lending' scheme involves the Bank of England lending money to financial institutions at below-market rates. First time buyers are not currently benefiting from the initiative however, as mortgage lenders have for the moment only cut the cost of their mortgage deals that involve large deposits. There has also been cuts in the cost of long-term, fixed-rate mortgages. A first time buyer putting down just a 5% or 10% deposit will not see any difference in the cost of their mortgage.

It is hope that small and medium sized businesses will also benefit from the scheme, with commercial lending having dropped by 17% in the last four years.
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