Mortgage approvals up following launch of Funding for Lending Scheme

 

There was tentative evidence that a multibillion-pound scheme designed to unclog the flow of credit to Britain's homebuyers was starting to have an impact today as official figures showed a spike in mortgage approvals.

The £80 billion Funding for Lending Scheme (FLS), launched by the Bank of England and the Treasury at the start of August, makes money available to banks on the condition they pass it on to businesses and households in the form of cheaper loans and mortgages.

The number of loans approved for house purchase rose by 2,103 to 50,024 in September, while the number of loans approved for remortgaging increased by 1,860 to 28,343, the Bank of England said today.

Meanwhile, unsecured consumer credit rose £1.2 billion in September, the sharpest rise since February 2008, including an increase of £307 million in credit card borrowing.

Nida Ali, economic adviser to the Ernst & Young ITEM Club, said: "September's increase in mortgage approvals is encouraging, and suggests that the Bank of England's Funding for Lending Scheme may be beginning to have some impact."

The figures come after the ITEM Club warned corporate lending will drop to its lowest level since 2006 this year despite state efforts to lower funding costs, such as the FLS.

Borrowers have faced a tougher time trying to take out a mortgage in recent months as lenders have tightened their borrowing criteria, causing a drop in the proportion of mortgages approved.

Bank of England Governor Sir Mervyn King last week said more than 20 banking groups, including the five largest lenders in the UK, have signed up to the FLS, while funding costs have fallen by around one percentage point.

However, the Governor warned the initiative was temporary and lenders would have to accept further losses and writedowns if normal banking services are ever to return.

Vicky Redwood, chief UK economist at Capital Economics, said: "The reductions in borrowing rates have primarily been aimed at households taking out mortgages with low loan to value mortgages. So they may not help first-time buyers much.

"In any case, the Bank of England has warned that it could take several months for banks to review their lending plans in the wake of the scheme."

PA

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones