Bank scheme still not helping first-timers
Monday 17 December 2012
First-time buyers and those with small deposits have seen barely any benefit of cheaper loan costs from the Bank of England's Funding for Lending scheme so far, according to figures compiled for the Independent.
Banks and building societies have been using the cheap cash on offer to slash rates on mortgage products for less risky borrowers, but those with smaller deposits are largely missing out, according to financial information provider Moneyfacts.
Borrowers with a 5 per cent deposit must still pay 5.84 per cent on average for the typical two-year fixed-rate £150,000 mortgage, just 0.19 per cent cheaper than the 6.03 per cent average rate on offer before the FLS began in August. Those with bigger 40 per cent deposits are gaining savings nearly three times as big as average loan rates for similar deals have been trimmed from 4.47 per cent to 3.93 per cent. The high cost of mortgages – when the Bank's official interest rates are at a record low 0.5 per cent – comes as official census data show the share of households renting jumping from 9 per cent to 15 per cent over the past decade. Home ownership has fallen from 69 per cent to 64 per cent.
There are just four extra deals on the market – bringing the total now to 66 – catering for borrowers with a 5 per cent deposit since August. Tracker rates for those with smaller deposits have also fallen by less than 0.1 percentage points.
A Moneyfacts spokeswoman said: "The introduction of the Funding for Lending scheme has seen the mortgage market heat up, with an increase in mortgage availability in the past few months. Recently several lenders have launched new products with attractive low rates. But it appears that these cuts in rates and loans products are targeted to the already serviced 60 per cent loan-to-value market.
"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."
- 1 Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
- 2 Frank Lampard's face drops when Holly Willoughby introduces him as a 'Man City legend'
- 3 UK weather: Britain braced for snow as arctic air mass moves in
- 5 General Election 2015: Stephen Hawking says he will vote Labour
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Aaron and Melissa Klein: Oregon anti-gay bakers ordered to pay $135,000 after refusing to make cake for same-sex wedding
Andrew Lloyd Webber: Phantom of the Opera writer mocked after issuing a warning about Ed Miliband and Nicola Sturgeon
General election 2015: Labour will toughen hate crimes legislation surrounding Islamophobia
HSBC review into moving headquarters from UK 'underway'
iJobs Money & Business
£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...
£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...
£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...
£45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...