The Bank of England said on Thursday that it would heavily scale back a scheme launched last year to boost mortgage lending, as house price inflation looks set to accelerate further.
Britain’s economy has staged an unexpected turnaround since the BoE launched the Funding for Lending Scheme with Britain’s finance ministry in July 2012 to help increase lending to home-buyers and businesses.
The scheme will now focus solely on enabling greater lending to small firms that still find it hard to borrow.
“Although the growth in household loan volumes remains modest, activity is picking up and house price inflation appears to be gaining momentum,” BoE Governor Mark Carney said in a letter to finance minister George Osborne, who backed the move.
Earlier this week Carney faced questions from lawmakers who are worried that a house price bubble is in the making, and that Britain’s economic recovery is hampered by a lack of lending to small firms.
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