UK banks accused of keeping back money to balance their accounts

The banking industry in the UK has recently been accused of keeping a great deal of cash in order to make its balance sheets more stable while the financial crisis occurs. The argument is that this money should not be imported by the banks, but be lent out instead to encourage businesses to grow, to make sure that the economy improves.

Furthermore, this money could be used by first-time buyers to purchase a home, which would solve a great deal of problems that are being seen in the housing industry. The Bank of England has recently announced that it is going to be lending around £80 billion at rates that are far below the market average in order to boost lending from financial institutions.

The idea behind the cheap rate of this money is that it is going to encourage lenders to pass on a low rate of borrowing to their customers. The whole purpose of this is that it is aimed at kickstarting the economy and injecting new life into both the property market, as well as small businesses.

This is different to quantitive easing as the Bank of England are going to be keeping a very close eye on the money and it is going to have to be lent out, or it is going to be taken away from the banks. Some critics have said that they are not sure who is actually going to benefit from this money that is being lent.

Several banks have already lowered their mortgage rates significantly because of the money and are going to be drawing in customers because of the lower rates. Unfortunately, the money is largely being put towards mortgages were a huge amount of money has to be put down as a deposit, something that first-time buyers are simply not going to be able to afford.