Funding for Lending on mortgages is ended

Loughton_Monkey

• Current FFL stimulus - £60 bn annually
• Amount intended for houses not business - ??? Say £30 bn?
• Amount currently being lent out annually for mortgages - £162 bn.
• Shortfall, therefore, is less than 20%.

But:

• To banks, £30 bn for business lending is a boil on the backside of an elephant.
• So easy to 'take' the £30 bn, and 'pretend' it was used to lend extra money to business (but it actually wasn't)..
• .. leaving a net £30 bn that can remain in the coffers to boost/maintain current lending levels.

.... large gin & tonics all round...
But if, on the other hand, savings rates have to go up to attract more funding, then all I can say is

.... even larger gin & tonics all round... :rotfl:

theEnd

Strange thing to end while HTB is still available.

wotsthat

Graham_Devon wrote: »

Can't say I'm not delighted

This move reflects a confidence that there's a returning to 'normal' in the mortgage market and lending can be maintained/ increased without FFL.

That's why you're delighted I'm sure.

antrobus

theEnd wrote: »

Strange thing to end while HTB is still available.

Not really. FFL is a scheme intended to encourage lending in general. HTB2 is a scheme intended to help FTBs who don't have access to a large deposit. FFL was launched because it was believed that the market was failing to provide adequate levels of finance to households. Now it is believed that the market failure no longer exists; hence the scheme has been withdrawn; at least as far as households are concerned. No doubt HTB2 will similarly be withdrawn as and when markets return to normal.

Quite logical really.

Scrootum

will be interesting to see if banks will now have to start competing for savers again. or if they have other sources of cheap funding.

HAMISH_MCTAVISH

theEnd wrote: »

Strange thing to end while HTB is still available.

No, as they target two different problems.

FFL addressed the general lack of liquidity in the lending markets, and as the BOE claim that situation has improved for residential lending, then it is no longer required.

HTB specifically targets the lack of high LTV lending as a result of new capital withholding regulations that make it 6 times as expensive to lend at 95% LTV as at 75% LTV.

HTB2 bypasses the capital withholding requirement thorough offering a MIG on commercial terms.

As an increase in liquidity generally does not solve that problem, then HTB is still required, and I suspect the ultimate exit strategy will be to replace the government backed MIG with similar private sector offerings.

Loughton_Monkey

HAMISH_MCTAVISH wrote: »

Carney said today that supporting the mortgage market through FFL is "no longer necessary"......

I'm not as close to it as you, Hamish, but my understanding was that generally speaking, the lenders these days have all the cash they need... at current underwriting standards... which manifests itself as "no reasonable mortgage application refused..."?

If this is the case, a <20% drop in cheap finance will have little or no impact?

Unless of course houses continue to sell like hot cakes, then I simply cannot see a problem. Issue a new 'limited withdrawal' savings account at 2% and a 2½% 12 month fixed rate - to lend out at 5% - will have savers biting their hands off.

Would be nice to return to the 'normal' system where banks truly compete to borrow money from us rich old savers, and then compete to lend it out to borrowers, thus turning in a couple of percent to pay their girls and boys and a few bob for the shareholders.

Loughton_Monkey

Graham_Devon wrote: »

.....Can't say I'm not delighted

I absolutely love this.

Mrs LM had to pick me up off the floor when I visioned you, grinning from ear to ear, salivating, bouncing on your little wooden stool in front of your tear-sodden keyboard.... switching between reading and re-reading the news and groin thrusting....

All because you think this is bad news.

Keep up the good work.....

We don't need stand-up comedians any more....:rotfl:

Graham_Devon

Hehe.

Who you all trying to convince? You should focus on the story instead of focusing on attacking myself. All I said was that I'm delighted. I've not said why.

Graham_Devon

They have also removed the temporary easing in capital requirements for mortgage lending.