The Bank of England has pledged to increase the amounts banks can lend to businesses and for mortgage lending. This is desperately needed and has been called for by many economists for some time, there is still the cry of too little too late by many economists. Many experts from the world of finance and property have long suggested that these measures should have been exercised simultaneously with quantitative easing. So what difference will this make? That depends greatly on the banks, banks have suggested that there is little appetite for borrowing. Many businesses, borrowers and house buyers have been put off even applying for lending as it has a negative effect on their credit rating if they are turned down and also they feel there is little point as lending criteria is so tight. This has lead to a cycle of less demand and less supply. Hopefully borrowers will feel more confident if funds are more readily available and banks will react quickly to the pent up demand from borrowers and home buyers. This is needed to increase transaction levels for house purchases and increase the UK’s woefully inadequate new build rates. Like the stock market the property market reacts badly to uncertainty. With the residential housing market not only driven by the market fundamentals like average earnings to house price ratios. It is also lead by sentiment people are very unlikely to buy houses that they feel may drop in value, they simply wait. Also existing home owners need little motivation to stay put but if they feel that if they put off moving up the housing ladder they may be priced out of the market they move swiftly. The banks have profited greatly recently as they have been quietly increasing tracker rates at the same time as the libor (London interbank offer rate) the rate at which they borrow has been moving down. The mortgage and property market needs a sensible and sustainable level of competition to help stimulate the housing and construction market while constraining the boom and bust of the property cycle to the minimum. The property market will always have peaks and troughs but with sensible management of the mortgage markets and money supply it will help to regulate the cycle.