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.