The Council of Mortgage Lenders (CML) has welcomed today’s publication of additional information about how the Bank of England’s ‘funding for lending’ initiative will operate.

The aim of the scheme is to enable access to cheaper funding than might otherwise be available to banks and building societies to support lending growth. It does not target specific parts of the market such as mortgages, instead being aimed widely at all types of lending to non-financial businesses and individuals.

If lenders increase their lending, funding under the scheme is significantly cheaper than if they reduce their lending. So the scheme is designed to provide an incentive for lenders to increase their lending.

The CML says that individual lenders will need to assess carefully how well the funding available under the scheme suits their individual funding requirements and lending aspirations.

The lender body believes that, in aggregate, the scheme is likely to act as a positive influence on both the flow and the cost of new lending for customers to support growth in the economy. But it is not possible to give a direct estimate of its potential impact on the mortgage market specifically, it warns.

“While it is difficult to say exactly what its impact on the mortgage market may prove to be, the ‘funding for lending’ scheme seems likely to encourage lending in its widest sense and to that extent should be a helpful support to economic growth,” said Paul Smee, CML director general.

“We will continue to look at the detail to identify any specific impacts for mortgage lenders.”