James Moore: There's plenty of money to borrow, as long as your record is squeaky clean

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The Independent Online

Outlook At last it seems that the Bank of England's decision to throw lorryloads of cheap money at the banks is having an effect. After a dismal November, when the British Bankers' Association said that lending slumped, things are set to pick up markedly, according to the Bank of England's Credit Conditions survey.

The Bank was today moved to declare that mortgage funds are going to rise "significantly". When it uses a word like that, things are getting really exciting. Some of the Old Lady of Threadneedle Street's denizens might even have been moved to loosen their ties.

But let's not get carried away. Against a poor economic backdrop, the Funding for Lending scheme, which provides banks with cheap money if they agree to advance it to homebuyers and businesses, was always going to take time to have an impact.

The fact that things are starting to move, perhaps significantly as the Bank says, is welcome. But the figures need to be viewed with caution. The Bank itself has noted that banks are being extremely careful about whom they lend to, and some are actually tightening their credit scoring. Missed a payment somewhere along the line? Live in a place where a previous resident had a county court judgment? Spent a bit much over Christmas? Then forget it, you're classified as a subprime borrower these days. The only people we want to lend to have 20-year employment histories at blue-chip companies and pay their Barclaycards off at the end of each month.

Credit might be available, but that doesn't mean that the rather limited pool of people who tick the right boxes actually want it.

No wonder Nationwide was predicting another slow year for the housing market, where prices are likely to continue their steady drift down, a decline that the Bank's scheme is unlikely to do much to arrest.

Before getting significantly excited, it would be best to wait and see if there is a sustained pick-up in net lending.

That said, the point about Funding for Lending is perhaps rather similar to the point people have made about the Bank's other great economic intervention, quantitative easing. Critics have queried the effectiveness of this programme, which has seen the bank buying up assets, largely government bonds, with the aim of increasing the supply of money to the economy. However, as the Bank's supporters would argue, the real question is how much worse would things be without it.