July 3, 2013 / 8:42 AM / 7 years ago

Banks expect another strong rise in mortgage business

A woman holds an umbrella as she walks past the window of an estate agents office in Manchester in this file photo. REUTERS/files

LONDON (Reuters) - Banks reported a sharp rise in mortgage lending in the second quarter and predict a further rise over the next three months, a Bank of England survey showed on Wednesday.

The quarterly Credit Conditions Survey said the rise mortgage lending had been helped by lower borrowing costs on the back of the government’s Funding for Lending Scheme and improved consumer sentiment.

The FLS was launched last year as a way to get more credit flowing into the economy. So far, the scheme has had more of an impact on lending for mortgages than on loans for companies.

The Bank of England’s survey found an improved economic outlook had also boosted demand for corporate credit in the second quarter. Lenders anticipated demand for corporate credit to increase in the coming quarter with the biggest rise expected from large firms.

The availability of corporate credit, however, was expected to remain little changed.

Royal Bank of Scotland has commissioned a review of its lending to small businesses, responding to concerns of a shortage of finance in a sector seen as vital to Britain’s economic revival.

The government-controlled bank is Britain’s biggest lender to small businesses.

The British government is concerned that poor access to finance among smaller firms may thwart a sustainable recovery from the country’s worst slump in decades.

Separate data from the Bank of England earlier this week showed lending to non-financial businesses fell by a net 1.27 billion pounds in May. Lending to smaller firms dropped by 452 million pounds.

Reporting by Christina Fincher and William Schomberg

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