Is it optimism or is it fear? That’s the question that rushed to my mind, yesterday, as the Bank of England announced that it is going to withdraw its Funding for Lending scheme away from mortgages and focus it on small businesses. It’s doing so in agreement with George Osborne, apparently.

The easy, and possibly true, answer is that it’s a bit of both. It’s optimism because it represents an acceptance that the mortgage-backing part of the scheme – which, in the memorable words of one analyst, has “bathed the mortgage market in cheaper credit” – has done its job, and is decreasingly necessary as the economy improves. It’s fear because it suggests that the Bank is wary of fuelling a housing market that, thanks to other schemes, such as Help to Buy, is getting hotter and hotter.

But it’s still striking how much emphasis the Bank is placing on the second motivation – the fear one. It came through even in their sober press release yesterday, which noted that “house price inflation appears to be gaining momentum”. But it’s been even more explicit in what people have been saying behind-the-scenes. One “senior policy maker” tells the Financial Times that “The BoE no longer wants to put its name to devices that stimulate the mortgage market.”

The politics of this situation are worth keeping an eye on. Not only do we have the real, pocket-book effects that may sway people’s voting intentions ahead of the next election: house prices, mortgage rates, inflation, and so on. There’s also the possibility that the Bank could become more proactive in cooling the housing market. Mark Carney clarified this week that the Financial Policy Committee cannot terminate the Help to Buy scheme, nor demand that the Treasury do so, but it can offer “recommendations” at any time. If the Bank were to start making unkind noises about one of Osborne’s flagship policies, it could be rather awkward for the Chancellor.

For now, though, there’s just the measure that has been announced. When the Funding for Lending scheme was launched, I registered my scepticism that small businesses actually want all the credit that politicians are eager to push on them. But far better that it’s being pushed towards them than into a housing market that doesn’t need the encouragement.

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