Consumers and businesses were lent a total of £2.6 billion during the first quarter of this year as a result of the Government's £80-billion Funding for Lending Scheme.
Figures released by the Bank of England (BoE) found £16.5 billion has been lent to individuals and enterprises since the scheme's launch in August 2012, with thirteen of the forty banks and building societies participating in the initiative lending a net value of £5.4 billion to the UK economy over the first three months of 2013.
Launched as part of the Government's drive to kick-start the UK's ailing economy, the FLS intends to encourage lending to consumers and non-financial businesses. Participating banks and building societies are offered low funding costs from the Bank of England, under the condition that the funds will be used to offer accessible loan and mortgage rates.
Borrowers have clambered to take advantage of low rates over the past few months, as lenders launch record low rates under the scheme, particularly within the fixed-rate mortgage market.
The initiative was initially set to run until January 2014, however, the Government announced in April that the deadline would be extended to January 2015.
In its report, the Bank stated: "The FLS aims to encourage more lending to the UK economy than would have been the case in the absence of the Scheme.
"It creates incentives for banks and building societies to boost their lending by reducing their funding costs, which allows them to reduce the price of new loans and therefore increase net lending.
"Funding costs have fallen significantly since the announcement of the FLS, and remain at low levels. There is evidence that rates have fallen on mortgages, unsecured personal loans, and loans to businesses of all sizes."
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