Latest Figures Reflect actual Effect of Funding for Lending Scheme
According to the latest figures from the Bank of England, the Funding for Lending scheme failed to benefit those which it originally set out to help. The objective of the scheme was to assist first time buyers and potential homeowners who had smaller than required deposits. Moneyfacts reported that many banks are largely using the extra funds to offer extremely low mortgage rates to those who are less risky on paper. This is leaving a large group of people out of the loop and still in need of assistance to start breaking into the process of moving on to the property ladder.
The average amount of deposit on a house still resides around 20% and first timers are challenged due to other factors to come up with such a figure. The natural increase in wages has fallen off in recent years and inflation on prices of the basic monthly needs has also made saving an issue.
A Moneyfacts spokeswoman commented on the effects of lenders cutting rates outside of the Funding for Lending Scheme, saying: “Recently several lenders have launched new products with attractive low rates. But it appears that these cuts in rates are targeted to the already serviced 60% loan-to-value market and often compensated by large arrangement fees.
“Although it is good to see an increase in choice in the mortgage market, it does little to reduce the worry of those who require a higher loan-to-value deal as these deals seem to not be as affected by the FLS scheme.”