It is generally agreed that the housing market is the golden goose that will kick start the economy, but to do that lenders must start lending again. In August 2012, the Government launched it's much publicised Funding for Lending Scheme, which allowed mortgage lenders to borrow heavily discounted money on the proviso that they in turn lent it for residential mortgages and loans to businesses.
Moneyfacts has just finished research into how this has helped first time buyers to get on the housing ladder.
Disappointingly (to put it mildly), it hasn't helped at all.
In July 2012, the month prior to the launch of Funding for Lending, first-time buyers looking for a 95% mortgage had a choice of 62 products from a range of 2,333, equating to a mere 2.66% of products.
One year later, first time buyers have fewer options, with just 54 products from 2,872 or 1.88% of the market to choose from.
Choice in the 90% bracket has increased, but with average first-time buyer house prices (according to the Halifax House Price Index) currently running at £130,041, a 10% deposit would be over £13,000 and out of reach for many first-home seekers.
Even with the additional products at 90%, the combined choice for first-time buyers remains static at just 14% of the market.
Sylvia Waycot, Editor at Moneyfacts said:
"When you cut through the hype of the Government initiatives such as the Funding for Lending Scheme, New Buy, First Buy and Help to Buy; a general increase in mortgages on the market; lowering of interest rates; and some fantastic marketing, little has actually changed for anyone looking for their first mortgage and in some cases, it has worsened.
"It might have all been very different had Funding for Lending been specific in ensuring lenders lent higher LTVs, but, as the main proviso is that they simply increase their lending books, we are unlikely to see much change from the conservative lending model and one opportunity to make a difference to this important market is lost.
"Remortgagers and those with large deposits are clearly much more welcome with an astounding 50% of products on the market aimed directly at this market in July 2012 and 48% today.
"The heavy focus on the less risky 75% - 60% loan-to-values is good for lenders but won't rekindle the mortgage market now any more than it has done in the last five years," she said.
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