Two major banks, the Royal Bank of Scotland and Lloyds TSB this week have pledged to increase availability of loans to help homeowners. As the details are still in the process of being finalised, they will officially announce the deal by the end of the week.
The banks are being funded by tax breaks of ?500 billion from the Government as part of latest initiatives to protect banks against unpaid assets. Until recently borrowers have suffered as banks have been understandably wary about lending in the present economic climate.
Last month mortgage lending from banks dropped to under ?10 billion, which is less than half the level at the same time in 2008. Despite Government pressure from Alastair Darling and Gordon Brown, banks continued to be wary about lending.
However, now that the Government is prepared to underwrite about ?250 billion of assets for each of the major banks, negotiations are in process and lending to homeowners should be on its way.
It has been confirmed from a reliable source that both banks have already agreed to an increase of at least over ?20 billion each. It is hoped too that they will pass on to borrowers the benefits of future cuts in interest rates.
