Smaller mortgage lenders may miss out on Osborne's funding plan.
The warning is Chancellor George Osborne’s UK mortgage master plan is most likely only to be made fully available to high street banks and selected large building societies.
The Bank of England together with the Treasury announced funding in excess of £100 billion to support both UK small business loans and mortgage lending. The funding is to be released in £5 billion tranches and the hope is it will enable more movement in the mortgage and property market.
Some critics have said that an injection of funding would seem wise while the UK economy is faltering, however the majority of cheap funding may end up in the hands of the larger lenders.
Any financial institution who has access to the BoE Standing Facility can bid for funds. However due to both the scale and nature of the UK's building society sector, either excess eligible collateral or resources may not be available to allow many smaller lenders to take full advantage of of funding on offer.
While Osborne's plan could drive down the borrowing costs for larger UK banks and building societies, it will remain to be seen if smaller lenders will benefit or whether it will just increase the current differentials further.
If you are searching for a competitive mortgage Deal Direct can help.
Contact one of our skilled advisers today for an up to date mortgage quote.
