BLOG: Funding for Lending must tackle higher LTV mortgages
At the Bank of England’s quarterly inflation briefing this month, the Bank’s agent claimed that secured loans to households had “jumped hugely”, largely attributed to the Funding for Lending Scheme.It is also attributed to increasing the number of loans above 75% lon to value (LTV).
Now while there are a lot of very good rates out there, most of them are still at very low LTVs. While there are 30 lenders now signed up to the Funding for Lending Scheme, it is unlikely that many lenders that have yet called upon the funds available, in large quantities, although many say that they do intend to over the coming months.
On the other hand what we are seeing is a much more positive sentiment and a whole raft of new mortgages with very low rates, there also seems to be an upturn in borrower sentiment and most advisers seem to be much busier than they were a year ago.
So while it seems improbable, that secured loans will have “jumped hugely”, because of the Funding for Lending Scheme, it is likely that the news that banks are lending again and that there are some very good rates available will all be having a positive effect on the sentiment of borrowers and people in the market.
One of my biggest concerns is that the wealth of money now available isn’t being used to fund new mortgages, rather there is still too much focus on the money merry-go-round that are remortgages rather than lending that will stimulate the property market.
In order to get the property market back to a more healthy transaction level, we need more lending to people coming onto the housing ladder for the first time and for people who wish to buy properties.
As we are, as yet, still in the first six months, the availability of credit is set to grow throughout next year and beyond – we just need to see more of it at higher LTVs and to fund house purchases.
Jon Round is chief executive of First Complete