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Audio: FLS only helped those with large deposits

Audio: FLS only helped those with large deposits

Category: Mortgages

Updated: 10/09/2013
First Published: 10/09/2013

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.'s editor, Sylvia Waycot, speaks to BBC Radio 4 Moneybox's Paul Lewis regarding whether the Government's Funding for Lending Scheme has had a positive effect on the mortgage market.

Sylvia points out that while the number of mortgage products for borrowers with large deposits has increased significantly, products targeted at those with only a 5% deposit – usually first-time buyers – have seen only marginal rises.


Paul Lewis: But once savings rates are ultra low, a quick scan through the best buy tables in the newspaper suggest that well, this isn't an especially cheap time to be a borrower. The difference between the rates at which banks lend and borrow is where they make their profit. It's called the spread, and now seems to a particularly lucrative time. But if the banks are getting cheap money through Funding for Lending at least they're passing it on in lending. Well, yes and no. The team at Moneyfacts tracked the number and type of mortgages on the market. Sylvia Waycot has compared where we are now with the spring of 2009 before the Government began its interventions of which Funding for Lending is perhaps the most recent and arguably the most significant. She says that although there are more mortgages on offer now, they are very much targeted at the wealthy, not the struggling.

Sylvia Waycot: If you had a 40% deposit in March 2009, there was 272 different mortgage products that you could have chose from to take your mortgage. Since Funding for Lending came in, it rose to 472 and it's now 544.

PL: It's basically doubled.

SW: Yeah. That market is the market that the banks and building societies are feeling more secure in. If you are a first-time buyer and were looking for a 95% mortgage in March 2009, there were only three on the market that you could choose from. Now there are 54.

PL: They've gone from non-existent, virtually non-existent to scarce.

SW: Yes.

PL: So the Funding for Lending Scheme seems to be helping the rich re-mortgage rather than say first-time buyers, and the banks don't have to lend out the money at all. True. If they didn't they will be fined but some suggest that the fines are set so low as to be no deterrent at all for the banks. They can simply take the Funding for Lending money and not lend it out.

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