Lenders scrambled for cheap funds from the Funding for Lending scheme in its final four months to beat the deadline when mortgage lending would no longer be eligible.
In the four months to the end of January, 31 participants drew £18.8bn in cheap central bank funding – a huge increase on the £5.5bn drawn from the scheme in the previous three months.
Total drawings amount to £41.9bn since the scheme launched in June 2012, meaning almost half of withdrawals were made in the four months to the end of January. Since the end of January, the FLS has not been available for mortgage lending. Business loans will still be eligible until January 2015.
Capital Economics property economist Matthew Pointon believes the vast drawdowns in the final four months of the scheme will give lenders “the resources available to grow mortgage lending at a steady rate for the rest of the year”.
The latest FLS usage data, published by the Bank of England this week, shows FLS participants achieved net lending of £5.8bn in Q4 2013, down slightly on the £6.2bn of net lending in the previous quarter.
Your Mortgage Decisions director Dominik Lipnicki says: “This amount of cheap funding will not be enough to stop rates creeping up.”