Funding for Lending scheme is having a positive impact on households

A scheme to lower borrowing costs for households does appear to be having a positive impact on the property market, according to a director at a county estate agency.

Leon Broady, financial services company director at The Property Centre, which has an office in Stroud, said the on-going effects of the Funding for Lending scheme on the UK mortgage market were positive.

The initiative was launched by the Government and Bank of England in August.

Leon said: "The Funding for Lending scheme, partly aimed at encouraging lending to potential home-buyers, does appear to be having a positive impact on the market as lenders continue to jostle for business.

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"The average mortgage pricing fell on both two and three year fixed products, with five year rates unchanged from October.

"Although these reductions in average rates are modest when viewed as a single figure, the recent overall trend shows interest rates on two-year fixed deals declining in each of the last five months, three-year fixed rates having fallen in each of the last three months, and five-year fixed rates having declined in four out of the last five months.

"As a consequence at the beginning of November average rates now stand at 4.40 per cent for two year fixed rates, 4.73 per cent for three year fixed rates and 4.57 per cent for five year rates."

Overall, the UK economy returned to growth during the third quarter of 2012, bucking the trend set over the three previous quarters.

Leon added a number of forecasters were of the view that The Bank of England's Monetary Policy Committee would announce a further injection of funding following their November meeting.

However, it appeared that the committee was adopting a cautious approach all round as the base rate also held at 0.5 per cent, he said.

"Fixed rate mortgages still appear to be the choice products among borrowers as many look for stability," Leon added.

"During October we have seen further take-up of fixed rates with more than 85 per cent of all borrowers who arranged mortgages last month electing to fix their mortgages, a new high for 2012."

Leon said mortgage product numbers typically available to intermediaries once again continued to improve in October, rising to above 6,000, the highest level since January.

"This is yet further evidence of the confidence that the Funding for Lending scheme is bringing to lenders, and as a result, to the whole of the market," he added.