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Mortgage Choices Boosted by Funding for Lending Scheme

The Funding for Lending scheme has boosted mortgage choice to record levels in the UK with many more products now on offer when compared to previous years. There were more than 10,000 mortgage products available on the market last month; more than there has been on the market in five years according to the National Mortgage Index from the Mortgage Advice Bureau.

The new data suggests that Funding for Lending has increased the number of mortgage products available as well as the variety of products on the market. The average number of products available in July reached 10,262 therefore product choice has improved by 33% over the last year alone. Consumer choice has improved by 97% over the last three years and 198% since July 2009. The data, taken from upwards of 500 brokers and 800 estate agents, shows that the average purchase mortgage rose for the fifth month in a row in July.

Overall, the average home buyer borrowed £159,391 in July of this year, an increase of 6% since January. However, salaries are not increasing at the same rate with the typical home owner’s salary rising by only half this rate since January. This means that the average loan to income ratio has risen slightly but this ratio remains similar to that found in 2012.

According to the MAB, the Funding for Lending scheme has decreased fixed rate mortgages significantly, with two, three and five year product rates down by 1%. The average two year fixed rate has seen the most significant drop and five year rates have fallen slightly further than three year rates. There have been a substantial number of borrowers taking advantage of the lower rates with 92% applying for fixed rate deals over variable rates. This is compared with the 79% seen in July 2012. In addition, 91% of home owners went for fixed rate deals when remortgaging when compared to the 77% in July 2012. Average borrowing for remortgaging has risen by 7% over the last year showing that many are seeing the benefits of the lower fixed rate deals.

Greater numbers of borrowers are turning to brokers for advice on mortgage lending indicating that there are a number of low priced products on the market to choose from. Increased competition between lenders means that there are more options on the market for consumers and many will benefit from the lower rates offered as a result of the Funding for Lending scheme.

Buying Houses since 1972