Today it has been confirmed that money will be lent to households and small businesses in the UK, at reasonable rates; something that Landlord Referencing Services has been campaigning for over the past two years.
Under the scheme, British banks are being offered funding at low interest rates over a four-year period. It will be directly linked to bank lending performance, to encourage lenders to increase loan availability and reduce rates.
Governor of the Bank of England and Chairman of the Monetary Policy Committee, Sir Mervyn King, has said the £80billion scheme will create ‘strong incentives’ for banks to increase lending.
For every £1 of additional lending made by a bank, it will be able to access an extra £1 of cheap funding from the scheme and those that reduce lending will have to pay higher fees to use the scheme.
He added: ‘The more banks expand lending, the more they can use the scheme. That will encourage banks to make loans to families and businesses both cheaper and more easily available.’
Banks will be able to access finance at rates from around 0.75% including fees – far cheaper than the equivalent 1.25% to 2.5% rate in finance markets. They will be able to borrow up to 5% of their existing lending stock, which will be increased if they expand net lending over the next 18 months.
The Bank will publish a bank-by-bank breakdown of lending each quarter, which will lay bare the success of the scheme.
Chancellor of the Exchequer, George Osbourne, said the scheme showed Britain was ‘not powerless to act’ in the face of the eurozone crisis.
This is definitely a significant step in the right direction for first-time buyers and small businesses who will benefit the most, after being starved of affordable credit for years.
Since the day Landlord Referencing started (2 years ago) we have been pleading with the government not to allow banks and institutions to simply borrow money at a gifted base rate and then dribble it back to business as a token gesture; at huge interest margins. But instead, start the National UK Bank & give money out to those industrialists & entrepreneurs who can build our economy by keeping restrictions on borrowing & spending, but keep interest rates low for those who want to work hard.
Therefore we are extremely pleased that they have sat up and taken notice of this.
If a garden is out of control we all understand that it needs to be cut back, in order for it to be able to flourish again – NOT to stop watering it entirely; as it will inevitably stop growing and die...
Hopefully they won’t just keep cutting back the bush now and actually start watering it again; meaning that we can watch our economy blossom once more.
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