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BoE warns lenders end of TFS a ‘systemic risk’

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The Bank of England has quietly warned mortgage lenders that the end of the Term Funding Scheme is a possible “systemic risk” to the country’s financial system.

Bank of England staff are understood to have told lenders this at the end of last year, according to the Telegraph.

Experts expect that lenders will raise rates this year to compensate.

TFS was a Bank scheme introduced in August 2016 to allow lenders to borrow at close to Base rate.

There was a total of £140bn available through the scheme, and lenders accessed £127bn of this.

The scheme ended in late February, though funds could be accessed for another month.

Lloyds Banking Group was the high street lender that borrowed the most under the scheme, drawing £18bn by the end of last year.

Royal Bank of Scotland was next (£14bn), followed by Barclays (£10bn), Nationwide (£9.4bn) and Santander (£8.4bn). HSBC did not access these funds at all.

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