Until borrowers can get a better deal than moving onto their lender's SVR, we are unlikely to see any significant improvements in lending figures.
Anyone with less than 25% deposit/equity will find that the new deals on offer are just too uncompetitive.
Michelle Slade, analyst at Moneyfacts.co.uk, comments: "There is simply no incentive at the moment for borrowers to go out and get a new deal. If you only have a small amount of equity in your home you are going to move onto your lender's standard variable rate (SVR) rather than pay over 6.00%.
"At a rate of 6.29% your monthly repayments on a £150,000 mortgage would be £993. If you are with Nationwide BS or Cheltenham & Gloucester your SVR is now 3.50%, which equates to £751 a month.
"It is going to take something pretty special to make a borrower pay £5,808 more over the two year term.
"Borrowers with less than 25% equity are in the majority, but they are being penalised with deals costing 2% more than on offer for those with 40% equity.
"Until we start to see competitive deals at 85% and even 90% LTV, we are not going to see any real improvements in the lending figures.
"Borrowers may want to borrow and lenders may start to lend again, but unless they lower rates on new deals we are going to continue with this stalemate position.
"The Government is asking banks to look at ways of lending responsibly. However, it seems that the banks are finding reasons not to lend at all."
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.