UK Finance comments on Bank of England measures
Commenting on the announcement today by the Bank of England of measures to respond to the economic shock from Covid-19, Stephen Jones, CEO UK Finance, said:
“The banking and finance industry recognises the concerns consumers and businesses may have about Covid-19 and all providers are ready and able to offer support to their customers who are impacted directly or indirectly.
“The new Term Funding Scheme with additional incentives for SMEs (TFS), and the release of the countercyclical buffer as it stands and reversal of the further increase that was in train, will help to ensure that funding from banks to businesses is not constrained and that excess reserves can be used to support lending to the real economy.
“Lowering the bank rate remains a challenge for the banking sector and, as acknowledged by the Bank of England, when rates are low it is likely to be difficult for some firms to cut deposit rates which could limit their ability to reduce lending rates. The launch of the TFS will enable the industry to support cashflow needs with competitively priced finance for this vital part of the UK economy.
“A rate cut will affect consumers and businesses in different ways depending on the nature of the lending and savings products they hold. The majority of mortgage borrowers will not be impacted by today’s rate cut, as they are on fixed-rate mortgages. For those mortgage borrowers on variable rates, lenders will be in contact to discuss any changes to their mortgage while many SMEs will automatically benefit where their borrowing is linked to bank rate.”