State support lending in the UK will not meet the expectations

Public support scheme credit Funding for lending is unable to refresh the flagging economy of the United Kingdom.

Was presented many explanations as to the fact that this year, banks lend a smaller amount of funds, particularly to purchase property in the UK than in the past, even though for a loan of ₤16.5 billion, which the banks received from the Bank of England. However, none of them is particularly convincing. According to experts, fundingforlending scheme (FLS) only updates market collateral, however, leaves the rest of the United Kingdom economy unchanged. And what good would this scheme, it was not the magic elixir that could heal the UK economy, the pace of development which has recently declined.

The first justification is a kind of protection from those banks which granted fewer loans to small and medium-sized businesses, which, in addition to wanting to buy property in the UK, and was designed FLS. However, the Bank explains that the problem is not in lack of supply and lack of demand just from business. But if so, then why so successful other credit schemes such as peer-to-peer? Why do so many people seek to get a loan? This suggests that the banking system of the United Kingdom is still not ready for the boom that happened in the real estate market in the UK, in particular to the volume of demand for mortgage loans.

On the other hand, there is the second excuse: the Bank of England insists that the FLS was originally planned as a slowly developing pattern, because you need to be patient, and only at the end of this year the volume of loans will increase. And here the banks really can understand.

If issue loans to buyers of apartments and houses in England is relatively safe, but investing in small business is risky. However, the development of lending in General may not only develop in one direction, so just need to improve the FLS so that it could support and business development.

The third justification lies in the fact that even if the situation is bad, without all the FLS would be even worse. Therefore we need a new, effective scheme or significant changes to existing FLS. As to the real estate market in the UK, then the following issue occurs: all the studies in one voice say that the demand for flats and houses in England and other parts of the United Kingdom is growing, and the price for it. And since the majority of buyers, especially not the elite real estate, buys it on credit, against the background of this growth is simply necessary well-developed system of credit as it may provide an opportunity for buyers to satisfy their demand, thus freeing the market from the oversupply in the property market in the UK, which obviously would not go in her favor. Operates many schemes to get a loan to purchase real estate, however, the FLS was assigned a really big hope, because a lot of people willing to believe those explanations.

® Mark Saruhanov 10.06.2013