Treasury support will 'maintain stability' in the market - commercial mortgages

14 October 2008

The British Bankers' Association (BBA) has claimed that the £37 million government support package for three of the UK's biggest lenders will help to maintain stability in the market.

Royal Bank of Scotland is set to take a share of the fund, as well as Lloyds TSB and HBOS when the planned merger between the two goes ahead.

It is hoped that by injecting more liquidity into the sector, more interbank lending will be encouraged and confidence will be boosted.

This could have benefits for all types of borrowing, including commercial mortgages.

UK businesses should benefit from the scheme and countries in the EU are thought to be following suit after Gordon Brown attended a meeting with European leaders.

The BBA stated: "We are pleased that other governments in Europe and elsewhere will now follow the lead taken by the UK."

Meanwhile, the banks that have accepted the government's help have agreed to maintain lending to small businesses at 2007 levels for the next three years.