Osborne reveals 'funding for lending'

The government is looking to boost lending in the UK, including in the country's property sector to help with the ease with which people, and first-time buyers in particular can get access to a mortgage, by looking to help lenders spend more money.

The chancellor George Osborne revealed the plan, funding for lending, which will see the government provide in the region of £140 billion in the way of grants which will allow lenders more freedom to provide more credit to those who need it the most.

Osborne said: "A lack of credit is damaging businesses and costing jobs, the government and the Bank of England have been working closely together to develop the right response."

It is hoped that those people who most need to receive credit in places where they currently cannot will be helped onto the housing ladder and into other forms of credit to help boost spending, and the British economy as a whole.

It has been difficult for many first-time buyers to get themselves onto the property ladder in recent years, mainly because banks are far more cautious when it comes to handing out mortgages, and as a result, they want to see a larger level of deposit, typically 20 to 25 per cent.

It is hoped that this new project will see the government able to help people get onto the ladder with less strict lending conditions.

However, not all the responses to the announcement of the scheme were fully praising of the government. Which? executive director Richard Lloyd said: "We want to see clear safeguards in place to ensure that banks pass this cheap credit on through loans to small businesses, and to consumers through lower interest rates on their mortgages.

"For too long, banks have taken advantage of the lack of competition on the high-street to increase the interest rates charged on mortgages, loans and overdrafts. We want to see more choice on the high street with banks genuinely having to compete for customers by offering better value and better customer service."