First-time Buyers
Cheaper higher LTV mortgages on way in Q1
UK mortgage lenders report the continued success of the Funding for Lending scheme continues to clear the way for cheaper mortgage loans and increased competition between lenders.
Tighter swap rates enabled higher Loan to Value (LTV) lending in Q4 last year, which will tighten further still this year, according to the Bank of England’s latest credit conditions report.
The survey revealed lenders report both increased risk appetites and a bigger interest in market share in the latest BoE lending survey. Lenders also report looser wholesale funding conditions for the first time in 18 months.
UK mortgage providers also report increased consumer demand across buy-to-let and prime mortgage lending and increased mortgage demand for house purchase in Q4. This increased demand is also expected to continue in Q1 2013.
Lenders said mortgage borrowers and the corporate sectors have benefited the most from the looser credit conditions, adding greater demand is being felt in both the remortgage and purchase markets.
Danny Waters, CEO, Enterprise Finance, said: “It’s fair to say that the Funding for Lending Scheme has proved far more effective than quantitative easing.
“It’s no surprise that most of the demand for secured lending is coming from the prime and buy-to-let sectors of the market.
“There are significant opportunities in the market at present and people with the funds to acquire property are extremely active.”
Medium-sized and larger firms borrowed more than smaller firms, according to the central bank survey.
The BoE said: “Overall credit availability to the corporate sector was reported to have increased significantly in Q4, the first reported rise for a year.”
It added that this trend will only gather pace in 2013.
Stewart Baird of SME venture funding company, Stone Ventures, commented: “Once again, this data confirms that funds are getting through to bigger businesses but not the smaller firms that need them most.
“Is 2013 likely to see a reversal in this trend? There is nothing to suggest small businesses will enjoy better credit conditions in the short term.
“The fact that demand for credit from small businesses weakened during the fourth quarter is a result of two factors: firstly, SMEs have given up on even approaching their bank and secondly, they are looking to alternative finance channels.”
