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Funding for Lending bank scheme launched

1 August 2012 Last updated at 07:56 BST

Banks and other lenders can start borrowing cheap money from Wednesday under the new Funding for Lending scheme.

The Bank of England will lend money at below-market rates to banks, and monitor their progress in lending the cash out to firms and households.

Some lenders have already slashed the cost of their long-term, fixed rate deals.

The programme effectively replaces the current National Loan Guarantee Scheme.

Hugh Pym spoke to Ray Boulger from mortgage brokers John Charcol for this report.