Latest research by Moneyfacts.co.uk has found low-risk borrowers with deposits of up to 40%, continue to be the main beneficiaries of cheaper credit under the Government's Funding for Lending Scheme (FLS).
Twelve months after the scheme's introduction, figures show that the number of mortgage products requiring deposits of 10% have increased from 259 to just 370, whilst customers looking to borrow around 60% of the property value have a choice of 606 deals compared with 472 products in August 2012.
Sylvia Waycot, Editor at Moneyfacts.co.uk, said: "It may have all started with a promise of cheaper rates and more lending and it could be argued that it has delivered. But a review of the market one year after FLS shows that whilst the rules may have been followed, the spirit of the idea is lagging somewhere out of sight. "Rather than see 95% loan-to-values (LTV) increase, product numbers have fallen by 20. In comparison, the number of 60% LTVs on the market has increased by 134.
"This mismatch in product numbers is carried through to the fall in interest rates offered to the FTBs with a 5% deposit who have seen rates fall by an average of 0.69% over the year as opposed to those with a 40% deposit who have enjoyed an average fall of 1.03%.
"If the Government is serious about re-kindling the mortgage market with its Funding for Lending Scheme, it should ensure all areas of the mortgage market are at the very least, equally addressed rather than continuing to encourage the cautious lending habits of the past few years," she added.
Average 2 year fixed (95%)
Average 2 year fixed (90%)
Average 2 year fixed (60%)
Average 5 year fixed (95%)
Average 5 year fixed (90%)
Average 5 year fixed (60%)
5% Deposit (95% LTV)
10% Deposit (90% LTV)
40% Deposit (60% LTV)
Information Correct as at: 31/07/2013
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