Moneyfacts research reveals that mortgage choice for first-time buyers looking for a 95 per cent mortgage has fallen despite the flood of cheap money courtesy of the Government’s Funding for Lending Scheme (FLS).
In July 2012, the month prior to the launch of FLS, first-time buyers looking for a 95 per cent mortgage had a choice of 62 products from a range of 2,333, equating to a mere 2.66 per cent of products.
One year later, first-time buyers have fewer options, with just 54 products from 2,872 or 1.88 per cent of the products to choose from.
Choice in the 90 per cent bracket has increased, but with average first-time buyer house prices currently running at £130,041, a 10 per cent deposit would be over £13,000 and out of reach for many first-home seekers.
Even with the additional products at 90 per cent, the combined choice for first time buyers remains static at just 14 per cent of the market.
Sylvia Waycot, Editor at Moneyfacts.co.uk, 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 per cent of products on the market aimed directly at this market in July 2012 and 48 per cent today.
“The heavy focus on the less risky 75 per cent – 60 per cent 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.”
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