Borrowers are continuing to see an increase in the number of mortgages available since The Bank of England’s Funding for Lending scheme (FLS) was launched in August, according to analysis from MoneySupermarket.
The comparison site found the number of mortgages available for borrowers has continued to increase over the past few months and mortgage rates have fallen.
The total number of mortgage products available six months ago (May) was 2,365 compared to 2,373 when the Scheme started. Currently there are 2,781 mortgages available, an increase of 17% since August.
Meanwhile since May there has been a 46% increase in the number of 60% LTV mortgages available, rising from 290 to 424. The average rate on 60% LTV mortgages has fallen 0.48 percentage points since May to 3.43%. For 80% LTVs, there has been a 20% increase, from 389 to 467. However, despite the sharp increase in the number of 80% mortgages available, the average rate has actually only fallen 0.09 percentage points to 4.01%.
The number of 90% mortgages has increased since the Funding for Lending scheme started in August, after a sharp fall from May. There are now 258 90% mortgages available compared with 242 in August – although in May there were 274 – and the average rate has come down slightly from 5.33% in May to 5.21%. On 95% mortgages, there are six more products now than there were in August. However, while the choice is greater, the cost of 95% mortgages has actually risen by 0.01 percentage points to 5.83%.
November also saw a rise in the number of two and five-year fixed rates available, with the addition of 37 and 58 new products respectively this month compared to October.
Clare Francis, mortgage spokesperson at MoneySupermarket, said: “The Funding for Lending Scheme definitely seems to be having a positive impact on the mortgage market. Our analysis shows there are now many more mortgages available than there were six months ago, although it is those borrowers who have the largest amount of equity in their homes who continue to benefit the most.
“That said, it is great to see that a number of lenders, including Santander and The Co-operative Bank, have launched new 90% mortgages in recent weeks and that Nationwide doubled the amount it lent to first time buyers between March and September. Many lenders claim their doors are open for business but the perception has often been different, particularly for first time buyers and those with only small amounts of equity in their homes over the past few years. Let’s hope that these moves indicate 2013 will be a better year for those trying to get a foot on the property ladder.”
The MoneySupermarket analysis also found fixed rates on mortgages have fallen, with rates on two year fixed products falling from 4.30% in May, to 3.81%, and five year fixed rates falling from 4.72% to 4.26%. The fall, although welcome, masks the true picture of the total cost of a mortgage, offset by the rise in the cost of fees. Average total fees for a five year fixed mortgage have increased from £1,091.05 to £1,189.64, a 9% increase since May. This means many borrowers could pay more for their mortgage despite lower rates.
