Funding for Lending failing miserably...

HAMISH_MCTAVISH

The six banks and building societies that used a flagship scheme designed to boost lending sucked £1bn out of the economy in the three months to September – including the two bailed-out banks, Royal Bank of Scotland and Lloyds Banking Group.

The funding for lending scheme (FLS) was dubbed a "white elephant" after the first data showed that in the three months to the end of September just £500m of lending was released by all the 35 banks and lenders signed up for the scheme, which was launched in the summer.

But only six banks and building societies actually used any funds from the FLS in the three months to the end of September and their net lending – which takes account of loans being repaid – was negative by £1bn because customers repaid existing loans faster than new loans were granted.

http://www.guardian.co.uk/business/2012/dec/03/funding-for-lending-scheme-500m-pounds

Not so much a "prop", more like a "toothpick".

As has been said many times, these government and BOE interventions are always too little too late, and only serve to make things slightly less bad than they would be otherwise.

They are not "stimulus".

They are merely making dysfunctional markets slightly less dysfunctional than they would otherwise be.

Christopher Shaw, chief executive of finance provider Platform Black, said: "The choice of name has proved to be unintentionally ironic. The funding is there all right, but there's precious little lending going on. What launched as the Bank of England's great white hope risks looking like a white elephant."

Hopefully the new BOE governor and the prospect of an upcoming election will focus minds and get lending to the mortgage market and small businesses moving again.

Then we might finally see some real economic growth.

Graham_Devon

That's a 2 month old article Hamish.

Try again. You are obviously searching for this stuff.

Heres a fresh one for you. From today.

Data from the Building Societies Association showed lending for 2012 was up 30 per cent year on year to £30.7bn, while Bank of England figures showed mortgage approvals in December 2012 were 55,785, above the six-month average of 50,058.

Adrian Coles, outgoing director general of the BSA, claimed these figures were helped by the BoE’s funding for lending scheme, launched last July.

He said: “More than half of the 35 firms that signed up to the scheme in December are mutuals. The full potential of the scheme and its benefits to homebuyers will be demonstrated as the year progresses.”

Meanwhile, data from the Land Registry showed house prices in England and Wales rose 1.7 per cent, which takes the average property value in England and Wales to £162,080.

http://www.ftadviser.com/2013/02/06/mortgages/mortgage-data/funding-for-lending-may-boost-housing-industry-bsa-8BgcSFGZZ3dd3uJPfynbyN/article.html

grizzly1911

HAMISH_MCTAVISH wrote: »

http://www.guardian.co.uk/business/2012/dec/03/funding-for-lending-scheme-500m-pounds

Not so much a "prop", more like a "toothpick".

As has been said many times, these government and BOE interventions are always too little too late, and only serve to make things slightly less bad than they would be otherwise.

They are not "stimulus".

They are merely making dysfunctional markets slightly less dysfunctional than they would otherwise be.



Hopefully the new BOE governor and the prospect of an upcoming election will focus minds and get lending to the mortgage market and small businesses moving again.

Then we might finally see some real economic growth.

All for pulling the numpty scheme get interest rates back up for savers.

Release some of the FSA lending restrictions but bring interest rates back up for new lending. Borrowers could budget in advance for the realities of life and set their own realistic levels.. Then start raising rates for existing borrowers get some movement going for better and for worse.

Thrugelmir

Not so much a "prop", more like a "toothpick".

As has been said many times, these government and BOE interventions are always too little too late, and only serve to make things slightly less bad than they would be otherwise.

They are not "stimulus".

They are merely making dysfunctional markets slightly less dysfunctional than they would otherwise be.



Hopefully the new BOE governor and the prospect of an upcoming election will focus minds and get lending to the mortgage market and small businesses moving again.

Do I detect concern? That cheap money is no longer working.

marathonic

I had thought that funding for lending was part of the reason that you can now get a 5-year fixed rate mortgage for 2.74%.

With CPI standing at 2.7% in December, does that means the real cost of borrowing is £100,000 is about £40 per annum?

HAMISH_MCTAVISH

Thrugelmir wrote: »

Do I detect concern? That cheap money is no longer working.

Cheap money is no good when the banksters subvert the goals of the BOE and use it to prop up their balance sheets instead of lending into the wider economy.

Rinoa

Funding for Lending appears to be working better than any of the other schemes conjured up over the last few years.

Banks only get it if they increase previous lending, and it's also available to building societies who never really benefited from QE.

Rates are falling, approvals are increasing and prices are slowly responding.

ruggedtoast

If interest rates go up then house prices go down.

michaels

I think there has been a (possibly) unexpected consequence of funding for lending - the sharp increase in bank margins.

As far as I can tell best buy savings rates are down by 1% whereas best buy mortgage rates are down by 0.5% at most.

Obviously great news for the banks, slightly good news for borrowers and a further transfer of income away from savers.

Wookster

Just no way of forcing people to borrow if they don't want it

HAMISH_MCTAVISH

Wookster wrote: »

Just no way of forcing people to borrow if they don't want it

Millions of creditworthy people want to borrow, but can't get loans.

Just 1.8% of mortgages issued last year were for 10% or lower deposits.

That tells you all you need to know.

Banks still rationing mortgage lending with absurd deposit levels well above the 5% to 10% that is historically normal, sensible and prudent.