Will mortgage holders benefit from the Government's lending boost?

The Government's plans to boost mortgage lending are being viewed positively but treated cautiously by the UK mortgage lending industry

The Government fund for lending scheme will be launched in a few weeks to provide funding for UK lenders at lower than normal market rates. There will be conditions in place to force lenders to lend to home buyers.

The BoE loans are to come with strings attached, banks and building societies have to pass on cheap loans through lower mortgage rates.

However, banks have previously been given access to cheap funding but not much of this filtered through to UK home-owners and buyers.

Which? are therefore calling on the Government to provide assurances that cheap mortgages will be available in the form of lower mortgage rates. In the last 6 months average mortgage rates have increased by around half a per cent.

The Council of Mortgage Lenders has commented saying it welcomes the decision to increase cheap funding but it's likely impact on UK mortgage lending is at present unclear. A spokesman added that lenders require more details before speculating about the scheme's likely effect.

Some are questioning the scale of lending proposed and how much of it will be dedicated to business lending as opposed to mortgages.

It is hoped that the funding will provide mortgages that otherwise would not have been available, which could improved gross mortgage lending in 2012.

The impact of the new scheme should be seen around September or October, only at this point should it be possible to predict whether would-be home-owners will benefit from the scheme.

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