Funding for lending and effect on rates

RG2015

The Funding for Lending Scheme is due to end on 31st January 2018, Does anyone expect this to result in an accelerated increase in savings rates?

Thrugelmir

No. More likely a progressive rise in lending rates though.

ivormonee

The Funding for Lending Scheme will cease to offer corporate lending on 31st January 2018. The lesser known, but also significant, Term Funding Scheme is also due to cease lending to businesses on 28th February 2018. Both schemes have offered lending at below market levels to UK corporations such as banks and building societies for quite some time. However, despite the schemes ceasing to offer lending from the above dates, the lending will take time to unwind and will not be overnight. This means that corporations/ financial institutions will not suddenly increase their need to borrow (ie. by offering competitive savings products) and so there is no expectation of any change in interest rates offered to savers in the immediate aftermath of the schemes' cessation. But as the unwinding progresses, we should, all things being equal, start to see interest rates creeping up and this should I expect become noticable from possibly later in the year, maybe Autumn onwards.

RG2015

ivormonee wrote: »

This means that corporations/ financial institutions will not suddenly increase their need to borrow (ie. by offering competitive savings products) and so there is no expectation of any change in interest rates offered to savers in the immediate aftermath of the schemes' cessation. But as the unwinding progresses, we should, all things being equal, start to see interest rates creeping up and this should I expect become noticable from possibly later in the year, maybe Autumn onwards.

Might some not go earlier to steal a march on the competition?

economic

would it impact rates on offer by P2P lending firms?

RG2015

economic wrote: »

would it impact rates on offer by P2P lending firms?

Not directly, as only banks and building societies are eligible so the funding model for P2P will not change.