According to the most recent report from the Bank of England, funding for lending had begun to make an impact on the mortgage market in the second quarter of this year.
Its figures show that net lending by the 41 banks and building societies participating in the scheme were up by £1.6bn during the quarter.
The increase in net lending in the three months to the end of June reverses a trend of falling lending over the previous two quarters.
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), comments on the latest Bank of England Funding for Lending Scheme 2013 Q2 usage and lending data:
“The success of the Funding for Lending Scheme’s (FLS) has been clearly demonstrated by banks and building societies boosting lending and reducing costs, with benefits of cheaper funding rife in the mortgage market. Since the start of the scheme average fixed-rate mortgages have fallen by at least one percentage point across two, three and five year deals, while total product numbers have soared to over 10,000 for the first time in five years.
“Yet as mortgages rise in number and fall in price, it’s been borrowers with sizeable deposits who have reaped the greatest rewards. In the past twelve months the typical purchase loan to value (LTV) has actually fallen slightly for homebuyers, stifling improvements in market access for those with smaller savings pots.
“As FLS enters the third quarter of 2013, we hope to see lenders extend the benefits of falling funding costs to higher risk sectors, combatting the risk of rising house prices locking out a larger proportion of potential buyers.”
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