Mortgages for private property purchases and Buy To Let landlords and business credit are becoming more widely available, thanks in part to the Government’s financial initiative, the Funding for Lending Scheme.
An indicator that moves to ease lending restrictions and free up credit appear to be working.
The £80 Billion (GBP) Government scheme, launched in August 2012 was intended to boost the flow of credit to private households and businesses.
The introduction of the scheme has resulted in a raft of new mortgage products being made available to first time, next time and buy to let property purchasers and has seen mortgage providers offering much more competitive rates.
The Bank of England’s latest lending report revealed that the availability of secured credit to households rose significantly in the second half of 2012, setting a new high since the survey began in 2007.
For tenants forced to rent PRS properties because they are struggling to get a foot on the housing ladder, the Credit Conditions Survey (CCS) released last week found that banks and building societies have increased lending to borrowers with smaller deposits, and are planning to increase their maximum loan-to-values (LTV’s).
A further ‘significant’ increase in lending is expected over the coming three months, the Credit Conditions Survey added.
Lenders reported that the FLS was helping increase the availability of credit and lower borrowing rates, while increased competition in the sector was also playing a part.
The Bank and Treasury launched the FLS to unclog the flow of credit to households and businesses by offering lenders cheap finance on the condition they pass it on to borrowers.
For every £1 of borrowed money lent out, banks are able to access an extra £1 reduced-rate loan from the scheme.
Lending to businesses is also improving, with the first increase in credit availability for a year.
But conditions remain tough for small firms, with banks only reporting a slight increase in lending to this sector and demand actually falling from small businesses. Large and medium sized firms appear to be benefiting most from increased lending and cheaper rates, according to the Bank.
Experts gave a cautious welcome to signs of improved credit supply in today’s report amid concerns that conditions remain tight and demand is still subdued.
While mortgage availability has increased, some lenders are reporting moves to tighten their credit scoring.
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