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 Forget 'The Dress': Here are five of the biggest news stories you might have missed
- 2 The black and blue dress: Makers considering a white and gold version
- 3 PornHub turns masturbation into energy in bid to save the planet
- 5 Saudi Muslim cleric claims the Earth is 'stationary' and the sun rotates around it
Boris Nemtsov shot dead: Outspoken Putin critic who had expressed fears for his life is killed near the Kremlin
PornHub turns masturbation into energy in bid to save the planet
Ukraine crisis: Top Chinese diplomat backs Putin and says West should 'abandon zero-sum mentality'
White and gold or blue and black – what colour is the dress? An eyewitness gives a definitive answer
Saudi Muslim cleric claims the Earth is 'stationary' and the sun rotates around it
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
This is what it's like to be dead, according to a guy who died for a bit
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...