The government has recently made available £80 billion to building societies and banks through the Funding for Lending scheme which it hopes will boost households and small businesses across the country. It is expected that soon many homebuyers are going to feel the benefits of the scheme which begins on 1 August. The idea behind the scheme is that it incentivises banks to offer cheaper funding to people who want to borrow money.
It is rather difficult to tell the impact that it is going to have on the housing market ahead of time, and many are unsure of how the banks are going to use the money. The government are hoping that the money will allow the banks to help people borrow money with even a small deposit, although it is possible that the banks will prefer to reduce the amount of risk they have associated with the capital and only lend money to people who are able to afford large deposits.
This sort of protectionist behaviour would mean that a great deal of help would probably go to investors who are looking to buy to let. It seems as if the extra money at the very least is going to improve the sentiment that is being seen in the market.
Currently the mortgage market is in a rather depressed state and most of the lenders are looking to safeguard their capital as well as their market share. Fortunately, during the summer, many lenders were seen to be pushing down the rates that they are offering on their fixed mortgages, which has been a positive thing for the market.
Some very good rates are being seen from banks such as HSBC, which offer a rate of below three percent if you are able to afford a large deposit. Santander are also offering a very favourable mortgage.