Whilst the availability of credit has remained unchanged for businesses, lending for personal property has seen improvement.
- FLS has an ‘early impact’
- Some of the UK’s best known banks are participating in the scheme
- Availability of secured credit has increased
Whilst the UK property market remains to be the subject of a lot of negative news since the financial crisis, it appears that lenders are now more comfortable with the current conditions and the Bank of England have recently revealed that the availability of secured credit has increased considerably in the third quarter of the year.
Although the majority of lenders still favour those with large deposits, it is still positive news for the real estate market. The fact that lenders have tightened their credit criteria may sound like bad news, but it offers reassurance of repayments and those who have managed to control their finances in the tough economy will still benefit.
There are also schemes that have been put in place to aid the lending process such as the Bank of England and Treasury’s Funding for Lending scheme (FLS) which came into action in August, hoping to aid the flow of credit to both households and businesses although the availability of credit for small, medium and large businesses remained the unmoved in the third quarter.
The Bank of England has stated that the ‘early impact’ of the scheme has already aided the lending rates and mortgage availability is expected to rise over the next quarter.
David Brown, commercial director of LSL Property Services, said: “Recently, there have been signs of a growing number of deals at higher LTVs, but in reality it’s still wealthier borrowers and those with spotless credit histories that are being favoured by banks and building societies.
“To give first-time buyer activity a real boost, and ease the strain on the private rented sector, higher LTV lending needs to be extended to a wider pool of potential borrowers. Let’s hope the FLS delivers this.”
Some of the institutions that have signed up for the FLS include Lloyds, Santander, Barclays and Nationwide.