The Bank of England’s Credit Conditions survey said that mortgage borrowers with relatively small deposits were benefiting the most: “The increase in availability of secured credit was reported to be concentrated on borrowers at higher loan to value (LTV) ratios of more than 75%, in part reflecting changes in lenders’ affordability criteria and increased availability for first-time buyers.”

The Bank today said that mortgage availability is expected to increase further over the next three months, including to borrowers spread across LTV ratios.

The Funding for Lending Scheme (FLS) was widely cited as contributing towards the expected improvement in secured credit availability.

Yesterday, the Bank of England confirmed 13 financial institutions that have signed up to the FLS. The list includes Lloyds Banking Group, Santander, Virgin Money, Aldermore, Barclays and Nationwide Building Society.

The Bank said it had seen an ‘early impact’ of its scheme as borrowing rates begin to come down, but said it was still too soon to know how much impact the scheme has had on the market.

David Brown, commercial director of LSL Property Services, said: “Recently, there have been signs of a growing number of deals at higher LTVs, but in reality it’s still wealthier borrowers and those with spotless credit histories that are being favoured by banks and building societies. To give first-time buyer activity a real boost, and ease the strain on the private rented sector, higher LTV lending needs to be extended to a wider pool of potential borrowers. Let’s hope the FLS delivers this.”

The Bank said that both the demand and supply for unsecured lending remained unchanged as households continue to tighten their belts, rein in excess credit and spending.

Graph below shows credit availability improving in 2012:

*Graph courtesy of the Bank of England