LONDON, Sept 26 (Reuters) - British banks plan a big rise in mortgage lending over the next three months, partly due to a new Bank of England scheme to ease credit conditions, but corporate lending looks set to remain flat, a survey showed on Wednesday.
The central bank said its quarterly Credit Conditions Survey showed banks reported the biggest increase in the availability of mortgages since the survey started in 2007 during the three months to early September, and plan a further record rise.
“The Funding for Lending Scheme (was) cited as an important contributing factor,” the survey said.
The scheme was announced in June and opened for business on Aug. 1, with five of Britain’s six biggest banks signing up. The scheme offers banks and building societies cheap finance if they increase lending to businesses or households.
The BoE and many British politicians blame a shortage of lending for the country’s very slow recovery from the financial crisis - though their concern is levelled as much at a lack of business lending as mortgage availability.
However, Wednesday’s BoE survey suggests that home-buyers will see most of the benefit at first, with banks planning to reduce the margin over their own borrowing costs that they charge home-buyers in interest.
By contrast, the lenders surveyed by the BoE did not plan to change the supply of credit to businesses, and expected to slightly increase the interest margins charged to small businesses over the next three months. Corporate defaults were expected to rise over the period.
BoE policymaker Paul Fisher said in a speech on Tuesday that he was confident the Funding for Lending Scheme would help the supply of credit, and that without it net lending would probably fall.