Posted on 1 February 2013 by
The Bank Of England’s Funding For Lending scheme (FLS) has been hailed by many as the saviour of the mortgage market, however there are an increasing number of critics claiming that once again it’s the banks that are the biggest winners.
There has already been sustained criticism that too much of the money has been thrown at headline grabbing 2 Year Fixed Rates in the already 60% Loan To Value (LTV) arena, rather being aimed at stimulating the First Time Buyer end of things. Whilst FLS has been a boon to mortgage borrowers, savers have found themselves targeted by the banks who no longer need to compete so vigorously with each other for savers business. Moneyfacts has revealed that in November 2012 some 150 different savings accounts were withdrawn from sale, and claim that out of approx 844 savings accounts offer a real return, after taking off tax and the effect of inflation.
Whilst thanks to FLS, we have seen a rash of changes to mortgage rates since the start of the new year, it’s still mainly those borrowers with a deposit / equity of least 25% that have seen the best reductions. In fact just last week the FSA was humiliatingly forced to admit to MPs that interest rates for those borrowers at the lower LTV’s had not come down “to the same extent” as the rates paid on savers accounts.
Higher Loan To Value rates (90%) have started to come down, which although welcome, they are long overdue. However without some relaxation in lenders attitude to risk, and their view on new build homes, any suggestions that FLS has been responsible for rejuvenating the mortgage market would be optimistic in the extreme.
There’s still a long way to go ....
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