Bank of England says good signs prove positive turn
San Francisco, CA -- (SBWIRE) -- 01/14/2013 -- The Bank of England has stated that money for mortgage lending, as well as general business loans has significantly increased within the final quarter of 2012. The increase means that loans have reached levels that have not been experienced by the country since the Credit Conditions Surveys taken in 2007.
The Times made it a priority to point out that this will reassure the government and Bank that the Funding for Lending strategy has begun to gain some momentum.
The results were likely a surprise to many analysts due to last month's report of the FFL increasing the standard lending by only 496 million for three of the largest entities, Lloyds, Santander, and RBS being repaid more in the old loans than they extended in new agreements.
The survey had been set up to survey the credit crunch as it began to take its toll on borrowers, who found it nearly impossible to access funds.
Capital Economics' Vicky Redwood stated that the data provided further evidence that the FLS was starting to enact its intended effects. She pointed to 26% net balance of lenders reporting an overall rise in mortgage availability over the previous quarter.
"This was an even higher balance than reported last quarter, which was already the highest since the survey began in 2007," she said. "For the first time the survey showed an improvement in the availability of credit to the corporate sector, too."
The Bank of England said that the margin between banks depositors and charge borrowers being narrowed was an addition positive sign. It stated that it expects credit availability to continue to expand within the first of the year.
Alan Clarke, of Scotiabank, expressed concern over availability not being turned into new loans in an interesting analogy.
"There is lots of supply of chocolate and confectionary in the Clarke household after Christmas, but I don¹t want to eat it and I don¹t want to give it to certain groups, ie the kids. There has been an improvement, but I don't think that this is the stellar improvement that the language in the report hints at."
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