Mortgage lending support scheme to be scaled back 28 November 2013 Last updated at 13:01 Mark Carney: "There is no longer a need for FLS to provide further broad support to household lending" A government-backed scheme to boost mortgage loans is to be scaled back, focusing instead on business lending. The Funding for Lending Scheme (FLS), launched last year, will no longer be aimed at householders, announced the Bank of England's governor Mark Carney on Thursday. An overheated housing market would be a risk to the economy, he said, adding that prices are rising in many regions. Supporting mortgage lending was "no longer necessary," he said. However, speaking about another mortgage scheme, Help To Buy, Mr Carney added that it was "still early days." Funding for Lending will be refocused on businesses from January 2014, the governor said. 'Silver bullet'? Chancellor George Osborne said: "Small firms are the lifeblood of our economy. That's why we're reforming the banks, introducing the employment allowance and now focusing the Funding for Lending Scheme to support them. Funding for Lending aimed to provide up to £60bn to banks and building societies so long as that money was lent to businesses and individuals. Mr Carney said: "The changes announced today refocus the Funding for Lending scheme where it is most needed - to underpin the supply of credit to small businesses over the next year - without providing further broad support to household lending that is no longer needed." He added: "Since the FLS was launched it has contributed to a substantial fall in bank funding cost, this has fed through to a significant improvement in household credit conditions. Given this success there is no longer a need for FLS to provide further broad support to household lending. Business secretary Vince Cable told the BBC that while he believes that the decision to re-focus the scheme away from households will improve borrowing prospects for small and medium sized companies, but is "not a silver bullet." One decision isn't going to change quite a deep structural problem. But it is certainly a move in the right direction. As far as small businesses are concerned, there are a whole lot of different issues here. Not a shock In response to the news, the Council of Mortgage Lenders said that decision reflects the "improvement in funding market conditions." The group's director-general Paul Smee said: "Although the changes to the FLS may be a surprise, they are not a shock. Mortgage lenders are well equipped to meet their funding needs, as wholesale funding market conditions have improved and retail deposits are robust. Mr Carney added that he sees a higher risk to financial stability if there are further rapid rises in house prices, and there were signs of house price growth picking up beyond London. Robert Wood, UK economist at Berenberg Bank, told the BBC: "The Bank needs to take away some of that extra help it has been giving, and this will help to slow down price rises. This is the first small step we will see in a continuing effort to move banks away from mortgage lending and towards business lending. Tougher tests In addition to the changes to FLS, Mr Carney also said that tougher affordability tests may be required in the future, for those taking out mortgages. From April 2014, banks will already conduct new affordability assessments, which are being used in the Help to Buy scheme. Currently, banks and building societies look at the predictions for interest rates, to see whether home-buyers could still afford their monthly repayments if interest rates go up. At the moment, those predictions suggest that interest rates could rise to 3% within the next five years. However, Mark Carney said that this may be an under-estimate if the the economy suffered from another global shock, which would likely push up interest rates more quickly. Concerns about a potential property market bubble have been growing, and earlier this month a committee of MPs asked the Bank of England to clarify its role in policing the Help to Buy scheme. The Treasury Committee said that the "scope and limits" of the Bank's role were not clear.