Net mortgage and business lending fell again by £300m in Q1 2013, again raising questions about the impact of the Bank of England’s funding for lending scheme.
The latest Bank of England figures show improvement on a £2.4bn drop in net lending in Q4 2012 but still means net lending has fallen £1.8bn since funding for lending launched last August.
The scheme was designed to provide cheap Bank of England funds to lenders as long as they increase or maintain their net lending on mortgages or business loans.
The Treasury select committee has criticised the scheme for a “bias” towards mortgages and called for it to focus more on business loans.
Almost £16.5bn has been withdrawn since August but only £2.7bn in Q1, compared to £9.3bn in Q4 2012. Barclays has withdrawn more than a third of the total with £6bn, while Lloyds Banking Group has taken £3bn and Nationwide £2.5bn.
Nationwide saw the biggest rise in net lending in Q1 with £1.2bn, followed by Barclays on £1.1bn. Coventry Building Society was the third biggest riser with an increase of £581m, followed by Virgin Money on £561m and Tesco Bank on £558m.
Santander saw the biggest falls in net lending by £2.3bn, with the Royal Bank of Scotland dropping by £1.6bn and Lloyds Banking Group by £983m.
The scheme is now available to 40 banks and building societies and the Government plans to widen its scope to other financial bodies next year.