Extension of Funding For Lending good for buyers

The Bank of England has announced that it is extending the Funding for Lending Scheme (FLS) until 2015, meaning that would-be buyers may have greater access mortgage finance.

The FLS, which offers banks and building societies finance at rates lower than those available commercially on the condition that they raise levels of lending for consumers and businesses, is already said to have supported the highest increase in first-time buyer numbers since 2008.

Commenting on Council of Mortgage Lenders (CML) figures which showed that the number of loans advanced to first-time buyers had increased from 15,900 in January to 16,400 in February, CML director general Paul Smee said:

“First-time buyers are continuing to take advantage of more favourable conditions, helping to drive the underlying trend for resilient house purchase lending.

“We hope that the new initiatives announced by the government in the 2013 Budget will further stimulate first-time buyer activity but also help those ‘second steppers’  looking to move into a new or existing home.”

Further figures from the CML also revealed that gross mortgage lending rose by 9% in March, rising from £10.6 billion in February to £11.6 billion in March.

CML chief economist Bob Pannell, argued that the figures had been buoyed by the FLS. He said:

“Conditions in the housing and mortgage markets continue to show signs of improving. The improvement in funding markets over the past year, reinforced by the incremental benefits of the Funding for Lending Scheme, has been the key catalyst behind stronger housing activity.”

Ernst & Young’s Item Club forecast that the combined impact of the FLS and the government’s Help to Buy scheme, will help to boost the number of property sales by 7.5% this year, by 2.1% in 2014 and 5% in 2015.

Peter Spencer, the Item Club’s chief economic adviser said: “We expect it to boost the number of housing transactions, particularly at the lower end of the market.”

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Posted by: Nicola Severn Categories: Finance Tags: , , Comments Off on Extension of Funding For Lending good for buyers

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