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| Version 3 | Version 4 |
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| Funding for Lending: Loans rise as scheme starts | Funding for Lending: Loans rise as scheme starts |
| (about 2 hours later) | |
| Lending to households and businesses increased slightly in the third quarter of the year as a new scheme began. | Lending to households and businesses increased slightly in the third quarter of the year as a new scheme began. |
| Banks took up £4.4bn in cheap funding from the Bank of England through the new Funding for Lending scheme, and their total net lending rose by £496m. | Banks took up £4.4bn in cheap funding from the Bank of England through the new Funding for Lending scheme, and their total net lending rose by £496m. |
| However, the Bank of England said it was too early to reach any conclusions on how effective the scheme had been. | However, the Bank of England said it was too early to reach any conclusions on how effective the scheme had been. |
| The figures showed that lending by four major UK High Street banks had fallen during the same period. | The figures showed that lending by four major UK High Street banks had fallen during the same period. |
| Lloyds Banking Group, RBS, Santander, and Co-op all saw lending fall during the three months to the end of September. | Lloyds Banking Group, RBS, Santander, and Co-op all saw lending fall during the three months to the end of September. |
| The data has been produced by the Bank as part of its Funding for Lending scheme (FLS), which was launched in August to try to encourage more mortgage and business loans. | The data has been produced by the Bank as part of its Funding for Lending scheme (FLS), which was launched in August to try to encourage more mortgage and business loans. |
| As the scheme was only launched in August, the Bank indicated that it might take time for the funding to flow through to the economy, owing to the time lag in applications, approvals, and drawing on loans. | As the scheme was only launched in August, the Bank indicated that it might take time for the funding to flow through to the economy, owing to the time lag in applications, approvals, and drawing on loans. |
| "I am confident that the FLS will help the supply of credit. The incentives in the scheme are for banks and building societies to cut lending rates and hence lend more to get the cheapest funding," said Paul Fisher, executive director for markets at the Bank of England. | "I am confident that the FLS will help the supply of credit. The incentives in the scheme are for banks and building societies to cut lending rates and hence lend more to get the cheapest funding," said Paul Fisher, executive director for markets at the Bank of England. |
| "But it is too early to use these data as a reliable indication of the impact of the FLS on lending volumes." | "But it is too early to use these data as a reliable indication of the impact of the FLS on lending volumes." |
| Bank-by-bank figures | Bank-by-bank figures |
| Under the terms of the scheme, the Bank of England allows commercial banks to borrow funds from it more cheaply, with the intention that the banks then pass this on in the form of cheap loans to households and firms. | Under the terms of the scheme, the Bank of England allows commercial banks to borrow funds from it more cheaply, with the intention that the banks then pass this on in the form of cheap loans to households and firms. |
| The banks will initially access Treasury bills of a value of up to 5% of the funds they currently lend. They are charged 0.25% interest, much less than the going rate. | The banks will initially access Treasury bills of a value of up to 5% of the funds they currently lend. They are charged 0.25% interest, much less than the going rate. |
| The figures published by the Bank of England are unique as they break down lending by institution. | The figures published by the Bank of England are unique as they break down lending by institution. |
| Some 35 lenders are taking part in the scheme, but they do not include HSBC. However, only six institutions had borrowed these cheaper funds by the end of September. | Some 35 lenders are taking part in the scheme, but they do not include HSBC. However, only six institutions had borrowed these cheaper funds by the end of September. |
| The figures show that during the third quarter - which takes in the first two months of the scheme's operation - net lending by Barclays increased by £3.8bn, and rose by £1.8bn at Nationwide Building Society. | The figures show that during the third quarter - which takes in the first two months of the scheme's operation - net lending by Barclays increased by £3.8bn, and rose by £1.8bn at Nationwide Building Society. |
| However, net lending fell by nearly £3.5bn at Santander, by almost £2.8bn at Lloyds Banking Group, and by £642m at RBS. | However, net lending fell by nearly £3.5bn at Santander, by almost £2.8bn at Lloyds Banking Group, and by £642m at RBS. |
| RBS said the scheme had still allowed it to cut the costs faced by small businesses to borrow money. Lloyds Banking Group said it was planning to apply for another £2bn on the cheaper terms by the end of December, to add to the £1bn already drawn by the end of September. | |
| The figures do not offer any estimate on what levels of lending might have taken place if the Funding for Lending scheme had not been introduced. | The figures do not offer any estimate on what levels of lending might have taken place if the Funding for Lending scheme had not been introduced. |
| The increase in the quarter of £496m remains a tiny proportion of the total stock of outstanding loans by the participating banks, accounting for just 0.04%. | The increase in the quarter of £496m remains a tiny proportion of the total stock of outstanding loans by the participating banks, accounting for just 0.04%. |
| The aim of the scheme is to increase bank lending by roughly £60bn by January 2014. | The aim of the scheme is to increase bank lending by roughly £60bn by January 2014. |
| Banks will face a fee at the end of January 2014 if they borrow money through the scheme but fail to increase their stock of lending, | Banks will face a fee at the end of January 2014 if they borrow money through the scheme but fail to increase their stock of lending, |
| 'Refusal' | 'Refusal' |
| Sajid Javid, Economic Secretary to the Treasury, said: "It is still early in the life of scheme, but Funding for Lending has already helped to deliver £0.5bn in loans for households and businesses. Though it will take time to fully feed through, the positive data shows participating banks are increasing their lending." | |
| The British Bankers' Association said: "As the scheme embeds in banks, we should continue to see the scheme acting as a driver for competition, benefiting all borrowers and therefore the wider economy. | The British Bankers' Association said: "As the scheme embeds in banks, we should continue to see the scheme acting as a driver for competition, benefiting all borrowers and therefore the wider economy. |
| "There should be no doubt that now is a good time for businesses and households to approach their bank to discuss their investment needs to sustain the economic recovery." | "There should be no doubt that now is a good time for businesses and households to approach their bank to discuss their investment needs to sustain the economic recovery." |
| But John Walker, national chairman of the Federation of Small Businesses, said: "What is needed is more competition and choice for small businesses to access finance. | But John Walker, national chairman of the Federation of Small Businesses, said: "What is needed is more competition and choice for small businesses to access finance. |
| "Our data tells us that around four in 10 small firms were refused loans in the third quarter and independent data shows that businesses looking for finance for the first time are more likely to be refused." | "Our data tells us that around four in 10 small firms were refused loans in the third quarter and independent data shows that businesses looking for finance for the first time are more likely to be refused." |
| Andrew Bowyer is a director of a Leicester engineering consultancy called Magna Parva, which specialises in designing equipment for the space industry. | |
| He recently wanted to borrow £25,000 from the firm's bank to upgrade expensive computer software, but he baulked at its insistence that he and his co-director must put up their own homes as security for the loan. | |
| "The business has been going for seven and a half years and has a very good credit rating, and it is the business which wants to borrow the money to develop," he said. | |
| "We turned the loan down, and many firms will do the same. | |
| "The knock-on effect is that borrowing will drop, and the economy will just slow down," he added. | |
| Have you managed to get a mortgage or loan recently? How difficult was it? Please send us your experiences using the form below. | Have you managed to get a mortgage or loan recently? How difficult was it? Please send us your experiences using the form below. |