INTEREST rates on new secured loans edged down in October, the third month since the Funding for Lending Scheme (FLS) began, data revealed yesterday, but rates on unsecured loans rose.
The average interest rate on new secured loans edged down from 3.77 per cent to 3.74 per cent last month, the Bank of England said. And in the same month, lenders extended £11.6bn in loans secured on houses, up from the £11.3bn gross lending in September.
But the average interest rate on unsecured loans hit 7.13 per cent in October, up from 6.72 per cent in September. In line with this, total consumer credit fell from £157bn in September to £156bn in October, dragging down total lending to individuals, despite the rise in secured lending.
But Chris Williamson at Markit said that the mild improvements do not mean FLS has succeeded. “Although the increase in mortgage approvals from 50,000 to 53,000 is encouraging, the number continues to run at almost half of the average seen in the 15 years leading up to the financial crisis,” he said.
“The data therefore suggest that the much-vaunted FLS has so far done little to provide the housing market with a much needed boost,” he added.