View more on these topics

FLS begins firing as net lending rises to £1.6bn in Q2

Lenders participating in the Government’s Funding for Lending scheme registered their first significant positive quarterly net lending figure since the scheme’s launch over a year ago.


Bank of England data, published today, shows net mortgage and business lending from FLS participants was £1.6bn in the second quarter, following negative net lending in the previous two quarters – a negative £2.4bn in Q4 2012 and a negative £1.8bn in the first quarter of the year.

In the third quarter of 2012, net lending was positive, at £39m, but pales in comparison to the Q2 2013 figure.

However, while net lending was positive in the second quarter, it is down nearly £2.3bn since the scheme’s launch in July 2012.

In the second quarter, Nationwide Building Society saw the biggest rise in net lending, at £2.3bn, with Lloyds in second with net lending of £1.3bn. Virgin was third with net lending of £738m in the second quarter, then Barclays and Coventry, with net lending of £668m and £576m, respectively.

Overall, since the scheme’s launch, Barclays’ net lending figure is the highest, at £7.5bn, followed by Nationwide at £7bn.

At the other end of the scale, Santander has seen net lending fall £10.4bn since the FLS launched last July, while Royal Bank of Scotland and Lloyds have seen net lending fall by £6.8bn and £5.3bn in that time.

While the Bank of England does not split the figures, it said aggregate net lending to individuals has been “positive recently and picked up slightly in 2013 Q2”, although net lending to businesses “remained negative” in the second quarter, despite the BoE offering greater incentives for banks to increase SME lending since April.

At 30 June, the aggregate outstanding FLS drawings from the scheme’s 41 participating lenders stood at £17.6bn.

BoE executive director for markets Paul Fisher says: “The FLS is continuing to support the economy with a range of indicators suggesting that credit conditions are steadily improving for households and firms, and FLS participants collectively expect net lending volumes to pick up over the remainder of this year.”

SPF Private Clients chief executive Mark Harris says: “While net lending is still lower than the amount withdrawn by participants in the scheme, this outlook has changed considerably with the Bank of England forecasting that lending will pick up during the second part of this year.

It takes a while for confidence in the housing market to re-emerge after such a long period of doom and gloom, and for buyers to realise that lenders have regained their appetite to lend. What we have already seen is that the FLS has had a significant impact on mortgage rates, with these falling significantly to historic lows.”

Table showing total drawdowns and net lending breakdowns:




The right blend of quality and quantity

There are a number of scenarios where size isn’t everything. Bigger isn’t always better and in the mortgage world we can often get too absorbed by the numbers game. But when bigger = more choice and flexibility for borrowers then it’s difficult to get away from the fact that this is actually the preferred scenario. […]

MS Summit 2014

Mortgage Strategy Summit 2014

Mortgage Strategy Summit 2014 will be an exclusive event which provides a unique opportunity to debate key issues in an environment that is conducive to open discussion. We aim to have 45 senior level delegates attend the Summit. As in previous years we will ensure, that all the leading broker firms in the mortgage market […]

Japan Economic Insight

James Dowey, Chief Economist, and Paul Caruana-Galizia, Economist

The conventional wisdom is that following a roughly 50 per cent rise in the stock market in 2013 in Yen terms, the Japan trade is over and done*. So the story goes, those big gains were due to a one-off boost from quantitative easing (QE) and a depreciation of the Yen — policies that one should think of as a palliative to Japan’s economic weakness, but not a cure. Rather the cure, and by implication the necessary condition for a longer-term investment case, is deep structural reforms — a painstaking re-weaving of Japan’s economic and social fabric, no less. The story continues: this is a much tougher test than launching a blast of QE, and one that prime minister Shinzo Abe, although well intentioned and well supported by the public thus far, is likely to fail. Stick a fork in Japan, it’s done…continue reading


News and expert analysis straight to your inbox

Sign up