Andy Knee, chief executive of LMS and Adrian Coles, director general of the Building Societies Association, said the extension, which will last until January 2015 in a bid to improve the mortgage market recovery, was a good move.
According the the government statement, for every £1 of net lending to SMEs in 2014, banks will be able to draw £5 from the scheme in the extension period. To encourage banks to lend to SMEs sooner rather than later, every £1 of net lending to SMEs during the remainder of 2013 will be worth £10 of initial borrowing allowance in 2014.
Andy Knee, chief executive of LMS, said: “The scheme can already be credited with generating some excellent deals for homeowners with healthy levels of equity.”
Adrian Coles, director general of the Building Societies Association, said: “Although welcoming the extension of the scheme, building societies are legally required to focus their lending on residential property so lending by building societies will continue to be predominantly mortgages to homebuyers.”
Adviser view
Alister Mellor, director of Buckinghamshire-based Financial Management Group, said: “It can’t do any harm. Small businesses ultimately drive the economy and if its a choice between that and helping first-time buyers, so be it. SMEs grow, they employ people and the mortgage market is gradually recovering anyway with a tick-up in borrowers.”
