Mortgage market on the up

The mortgage market is one that has been light on good news ever since the credit crisis hit, changing its face almost overnight. The tightening of criteria and tougher deposit requirements meant that there was little of cheer for those looking for a new mortgage.

However there has been something of a turnaround in market conditions with lenders now fighting tooth and nail to attract mortgage borrowers. Hardly a day passes without a lender making some alterations to its mortgage range and in the vast majority of cases that means better rates for borrowers.

This improvement in both mortgage pricing and availability can be largely traced back to the launch of the Funding for Lending Scheme (FLS) by the Bank of England. This has given lenders access to a line of cheaper funding that has triggered a significant increase in lender appetite for mortgage business.

Whereas at one time lenders were pulling back and trying to carefully manage their volume, now they are actively competing to attract borrowers. That increase in competitive tension is improving the deals available to borrowers across the spectrum. Although those with smaller deposits will still pay higher rates, the influence of FLS has filtered through to benefit those borrowers too.

This is resulting in more upbeat figures, with the Council of Mortgage Lenders reporting the number of first time buyers increased by 20% in March. The Royal Institution of Chartered Surveyors reported that demand for property in April was at its highest for 3 years. We are also seeing more borrowers looking to review their mortgage deal and remortgage to save money.

This improved confidence in the market comes largely on the back of the vast improvement in mortgages. The first phase of the Help to Buy scheme has also launched offering a 20% Government backed equity loan. The publicity surrounding that is only likely to generate more interest.

Of course lending criteria is not loosening and nor is it likely to as the implementation of the Mortgage Market Review looms on the horizon. However with mortgage rates at record lows in some cases, and availability much improved, there is much more positive news that will hopefully only gather momentum.

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