The Bank of England and the Treasury have today (July 13th) unveiled details of the “funding for lending” scheme, which aims to boost lending to businesses and households.
Under the scheme, the Bank of England will make cheaper funds available to banks, equivalent to five percent of the amount they currently lend; and it has been announced that as part of the new scheme, if High Street banks are able to increase the amount they lend to consumers and businesses through loans and mortgages, they will be able to borrow more, with no upper limit.
Following the announcement of the scheme, the Chancellor George Osborne said: “Today’s announcement aims to make mortgages and loans cheaper and more easily available, providing welcome support to businesses that want to expand and families aspiring to own their home.”
He added that the initiative would “inject new confidence into our financial system and support the flow of credit to where it is needed in the real economy – showing that we are not powerless to act in the face of the Eurozone debt storm.”
The Funding for Lending scheme is set to begin in August of this year, and will remain open for an eighteen month period.