The Bank of England recently launched a scheme to push at least £80bn of cheap funding into banks and building societies to boost mortgage lending in an attempt to kick-start the housing market.

Most if not all of the big players have taken advantage of this and secured funds. The effect on their mortgage products has been varied.

Some lenders have offered new customers a relatively cheap deal – cheap, that is, if they have a large deposit. However, in order to obtain one of these cheap products borrowers still have to jump many hurdles. In some instances customers are being refused funding at the very last hurdle. Is this fair?

Other banks are only offering similar cheap deals to their existing, good, low-risk customers to ensure that they stay.

All this I suppose could be called a good thing?

I don’t think so. The reason the Bank of England gave cheap money to the high street banks was to revitalise the bottom of the market, i.e. first-time borrowers. This would then stimulate movement higher up the market. But what do first-time buyers get? Not a lot!

The net result is that these big banks have got their grubby little paws on more funds, thus securing their positions again, whilst customers continue to find it difficult to obtain funding…

All in all, another reason to choose a good broker.

Posted in First Time Buyers, Mortgages