Recent data from the Bank of England revealed that increased loan availability offered by banks may make it easier for home buyers to obtain a mortgage.
A report from the U.K. central bank said that, with assistance from the Funding for Lending plan, banks plan to significantly increase lending over the next three months and also plan to boost their market share, The Guardian reports.
“We should not get too carried away,” Chief Economist of Capital Economics Vicky Redwood said, according to The Guardian. “Whether banks actually follow through on these intentions to boost the supply of credit remains to be seen. What’s more, even if banks make more credit available, firms and households may not want to borrow more. Although demand for household credit was reported to be improving, demand for corporate credit was expected to remain subdued.”
A net balance of approximately 26 percent of mortgage lenders reported a rise in the availability of secured credit over the last three months, exceeding the balance reported in the third quarter of 2012, the highest since 2007.
The availability of mortgages increased during the period, and rates also decreased and are expected to decrease further in future months, due in part to cheaper funding and growing competition, The Guardian reports.
As a result of improved rates, demand for buy-to-let and home mortgages increased at the end of 2012, though the availability of small business loans increased only slightly.
“There are signs that smaller companies may not benefit as much as larger and medium-sized firms, which would be disappointing given that is a lack of available and affordable credit to smaller companies that has been of particular concern,” Chief Economist of IHS Global Insight Howard Archer said, according to The Guardian. “The implication is that banks remain very cautious about lending to smaller businesses in the current difficult and uncertain environment.”