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Follow on Google News | Bank of England disappoints non-banks with Funding for Lending Scheme decisionNon-banks have expressed their extreme disappointment and furthermore their concern at the Bank of England’s decision to continue to exclude them from being active participants of and feeling the benefit in the Funding for Lending Scheme.
By: Caboodle Finance Non-banks have been pushing constantly over recent months for the central bank to allow them access to the ‘cheap’ funding opportunities presented by the Funding for Lending Scheme since it was officially launched back in August. The announcement has sparked further disappointment and has prompted concerns that a valuable opportunity to promote wider competition in a mortgage market that could do with all the help it can get, has been passed up. Intermediary Mortgage Lenders Association executive director says: “The UK needs a more competitive mortgage market, rather than one where effectively privileged funding was given to a fairly selective group of players. Allowing non-banks access to the funding would go some way towards achieving this and further strengthening the mortgage market. We are pleased about the extension of the deadline but are disappointed and remain concerned that the Funding for Lending Scheme hasn’t exactly enhanced competition in the marketplace, and may inadvertently have actually made it tougher”. There are still many attractive products available in the UK an example of which can be seen by visiting http://www.caboodlefinance.co.uk/ Precise Mortgage managing director says it is unlikely non-banks will benefit at all from this indirect compromise offered by the Bank of England since there is no compulsion on the part of banks to co-operate in any way. He also went on to say, “There is a good chance non-banks will not take this up in any great numbers. You have to go through a bank and, if they do not want to help, there is no compulsion on their part to pass it on to non-banks. If banks do not want to play ball, then it is over before it is started. We, as many other are, are disappointed in the current structure of the Funding for Lending Scheme and we will continue to make investigations in order to see how it might be of benefit to us in the future.” Under the terms of the Funding for Lending Scheme lenders must deposit collateral with the Bank of England as a security and each lender can then access up to 5 per cent of its existing stock of loans to SMEs and households which in turn incentivises them to boost lending because every pound of additional lending would become eligible for the scheme. The scheme was introduced in the expectation that lending, including mortgages, would become easier and that it would inject competition resulting in better products for consumers. Although this has been seen to a degree in the mortgage market it has not necessarily had the desired effect as many mortgage lenders who have participated in the scheme have not yet made the level of adjustments expected by the Bank of England when it introduced the Funding for Lending Scheme. Despite the fact that mortgage and remortgage rates are at an all-time low the Funding for Lending Scheme was expected to allow lenders to expand their product range to help first time mortgage borrowers with smaller deposits, ‘second steppers’ looking to move up the housing ladder and homeowners looking to remortgage their existing home for a favourable mortgage deal. This has not yet filtered through to the market as many lenders are still focusing on mortgage borrowers who provide what is perceived to be the lowest risk, i.e. those with no bad credit, those who have stable employment and those who have a significant deposit or a good level of collateral in their property. For more information about remortgages in the UK visit http://www.caboodlefinance.co.uk/ For further information about mortgages, remortgages and the UK mortgage market visit http://www.caboodlefinance.co.uk/ End
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