Institutions expect rates to fall

Robyn Hall

April 3, 2013

In the three months to the beginning of March lenders reported an increase in the overall amount of credit made available to households.

Lenders attributed the improvement in conditions to the Funding for Lending Scheme which has pushed down borrowing costs for customers.

Brian Murphy, head of lending at the Mortgage Advice Bureau, said: “Today’s Credit Conditions Survey emphasises mortgage rates steady improvement over the past six months.

“Average rates for two and five year fixed mortgages are on course to drop below the 4% barrier by the end of April, as the outlook for mortgage borrowers continues to brighten.”

The BoE also reported that the rise in lending to those with less than 25% deposits but a higher proportion of people were having loans rejected after failing credit checks.

Murphy said: “Generous helpings of Government funding have sparked lenders’ appetite for risk, with average fixed rates falling by more than 0.5% across the board since the Funding for Lending Scheme (FLS) was announced in August 2012.

“A competitive market environment has created attractive deals that have even begun to climb the LTV curve, starting to make better rates accessible to those with less to invest up-front.”

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