- Max fee of 1.5% to apply where lending shrinks at least 5%
- Funding for lending scheme targets lending to households, companies
- Banks may borrow T-Bills over 18 mth period for a fee
- Those banks that maintain or increase lending will only pay 0.25%
- Fees will depend on lending volume to the economy
- 5% of current loan stock equates to around £80 bln
- Banks can borrow initial 5% of existing loan stock
- Banks will have up to 4 years to repay
- No upper limit to lending scheme which will begin on Aug 1st
- Access to additional funding will be dependable on amount of credit generated
- Bank lending more likely to decline without scheme
The scheme is the latest measure to help the UK fend off European contagion and help pull the economy out of recession, hopefully making mortgages and loans more easily available and cheaper.