BoE reduces mortgage support scheme

Written By Unknown on Kamis, 28 November 2013 | 19.13

28 November 2013 Last updated at 06:34 ET

The Bank of England is to scale back a scheme to boost mortgage loans, focusing instead on business lending.

The Funding for Lending Scheme, launched last year, will no longer be aimed at householders, said the Bank's governor Mark Carney on Thursday.

An overheated housing market would be a risk to the economy, he said, presenting the Bank's Financial Stability Report.

Supporting mortgage lending was "no longer necessary".

However, speaking about another mortgage scheme, Help To Buy, Mr Carney added that it was "still early days".

Funding for Lending will be refocused on businesses from January 2014, the governor said.

Chancellor George Osborne said: "Small firms are the lifeblood of our economy. That's why we're reforming the banks, introducing the employment allowance and now focusing the Funding for Lending Scheme to support them."

Housing bubble?

Funding for Lending aimed to provide up to £60bn to banks and building societies so long as that money was lent to businesses and individuals.

Mr Carney said: "The changes announced today refocus the Funding for Lending scheme where it is most needed - to underpin the supply of credit to small businesses over the next year - without providing further broad support to household lending that is no longer needed."

Mr Carney added that he sees a higher risk to financial stability if there are further rapid rises in house prices, and there were signs of house price growth picking up beyond London.

Concerns over a potential property market bubble have been growing, and earlier this month a committee of MPs asked the Bank of England to clarify its role in policing the Help to Buy scheme.

The Treasury Committee said that the "scope and limits" of the Bank's role were not clear.


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