BoE figures show lack of Funding for Lending

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The Funding for Lending Scheme seems not to be living up to its name, as the latest figures from the Bank of England show a net drop in the amount lent by participants during the fourth quarter of 2012.

 

In the three months to the end of December, net lending by participants of the FLS stood at -£2.4 billion.

 

The figure relates to lending by 39 participating groups, which together represent more than four-fifths of lending to the ‘real economy‘.

 

Overall in the fourth quarter, net lending by all lenders was down by £2.7 billion, including those who are not part of the FLS.

 

However, the Bank claims that seasonal effects explain the negative result – and that figures for all lenders in January 2013 showed an increase of £3.1 billion.

 

Paul Fisher, executive director for markets at the Bank, says: “The FLS has clearly shifted the supply of credit: loans are generally available at lower cost than previously.”

 

He adds that, at the current relatively early stage in the FLS, it is likely that many applications made under the scheme have yet to filter through into real-world lending.

 

“I would not expect to see a return to rising aggregate quantities until we start getting data for 2013 at the earliest,” he predicts.

 

“Nevertheless, it does seem that we have the beginnings of a revival in mortgage activity, which is visible in the approvals data, and that trend is widely supported by business contacts throughout the country.”

 

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