Government mortgage lending scaled back

The Bank of England refocus funding for business saying mortgage lending was 'no longer necessary.'

By Dave Lancaster |

15:18 29 November 2013

Following news that the government is scaling back on mortgage lending, shares in leading housebuilders fell by as much as 5per cent. Mark Carney explained the move saying that supporting mortgage lending was “ no longer necessary.” He added that an overheated housing market would be a risk to the economy particularly during this time when house prices on certain regions keep on rising. 

 

Chancellor George Osborne said: "Small firms are the lifeblood of our economy. That's why we're reforming the banks, introducing the employment allowance and now focusing the Funding for Lending Scheme to support them."

 

"The changes announced today refocus the Funding for Lending scheme where it is most needed - to underpin the supply of credit to small businesses over the next year - without providing further broad support to household lending that is no longer needed."

Meanwhile, Robert Wood, UK economist at Berenberg Bank, told the BBC: "The Bank needs to take away some of that extra help it has been giving, and this will help to slow down price rises.

"This is the first small step we will see in a continuing effort to move banks away from mortgage lending and towards business lending."