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Funding for Lending a ‘stop-gap’

Expectations about what the Government’s Funding for Lending scheme can deliver are “too high” and it should only be seen as a “stop-gap solution”, warned the Council of Mortgage Lenders last week.

In its fortnightly newsletter, News & Views, the trade body says while the scheme is useful, it should not be viewed as a replacement for other forms of funding, like wholesale funding or retail deposits.

The scheme, which is open for the next 18 months, allows eligible institutions to borrow up to 5 per cent of their existing loan books in UK Treasury Bills for a 0.25 per cent fee for a period of up to four years.

The scheme encourages lenders to increase their lending, with a promise of more funds at 0.25 per cent if they do. However, lenders that shrink their loan books will have to pay more for the funds, up to a maximum of 1.5 per cent.

The CML’s newsletter says: “While the new Funding for Lending Scheme, which enables lenders to access cheap funds from the Bank of England at rates that get more attractive the more they increase their net lending, is a useful stop-gap, it is already suffering from expectations that are too high about what it can deliver.”



NewBuy ‘gaining momentum’ as it hits 1,300 deals

The Home Builders Federation says the Government’s NewBuy scheme is ”gaining momentum” as it hit 1,300 reservations since its launch six months ago. The take-up rate is slightly higher than the 600 reservations made for the first three months of the scheme from March to June. The HBF, which along with the Council of Mortgage […]

Barclays to shrink tax advisory unit in reputational clean up

Barclays is to shrink its tax structuring unit as new chief executive Anthony Jenkins pledges to clean up the bank’s image. The business, which is known as the structured capital markets unit, made up to three-quarters of profits at Barclays’ investment banking operation at its peak, according to reports. In a call with investors yesterday, […]


SRA to crackdown on mortgage fraud in conveyancing review

The Solicitors Regulation Authority is conducting a review of the current practices of conveyancing firms to reduce the risk of mortgage fraud. Following the review, which is due to run until the end of 2013, the regulator will will update its draft supervision and enforcement strategy for conveyancing, a first draft of which was originally […]

Coventry Intermediaries launches new remortgage range

Coventry Intermediaries has launched a new range of fixed rate, tracker and offset remortgage products with rates starting from 3.1 per cent. The new range contains products available from 65 per cent to 80 per cent and all the products in the range contain a free valuation up to £670 and access to the lender’s […]


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