It is no secret that the UK housing market needs a shot in the arm to improve recovery within the most influential sector of any country.  That was the intent of the government-backed Funding for Lending scheme introduced in the month of August 2012.  Early results of the scheme were positive in nature but since then the results have cooled quite a bit.  The final quarter of last year proved to be even more disappointing as only one third of the total amount of banks with access to funds actually withdrew any of the money available.  That equated to almost 2 billion pounds being left on the table.

The premise behind the Funding for Lending scheme is simple.  When loans are applied for and will ultimately end up in the hands of businesses or households, that bank is able to obtain funds for that loan at a cheaper interest rate. 

A spokesman for the Treasury commented on the positive influence of the scheme, saying: “The FLS has already succeeded in reducing borrowing costs, with some mortgage rates at their lowest for five years. For example, a two-year £100,000 mortgage with a 10pc deposit is £1,000 cheaper in the first year than before the scheme started.”

Others within the mortgage market have seen positive strides taken due to the Funding for Lending scheme.  Lea Karasavvas, managing director of Prolific Mortgage Finance commented on the overall impact of the scheme, saying: "From a mortgage perspective, few brokers will deny that the Funding for Lending Scheme is firing on all cylinders.”

Karasavvas added: "The mortgage market's SOS has been answered by the FLS.”