Funding for Lending to be stopped, market confidence good.

The big news of the week is the imminent withdrawal of the Funding for Lending scheme, a year earlier than planned, by the Bank of England.   The FLS scheme was launched in July 2012 and currently offers cheap loans to lenders who in return are expected to pass on lower rates to the end consumer. 

The reasoning behind the decision given is to encourage the lenders to re-focus and increase funding loans to small businesses, rather than mortgage lending.

At a period when house prices are on the increase, lenders are citing that increased volumes and Help to Buy offerings are boosting consumer confidence, the timing might not be great (please note that Help to Buy is unaffected by the FLS scheme withdrawal). 

Many suggest that this is a sure sign that the mortgage market is in a position to move forward on its own two feet.  Only time will tell!

However, should you rush and panic to secure some of the fantastic rates currently available?  This is a difficult one to answer.  The lenders have until January to request funds from the scheme and we have no intricate small print details as to the closure of the scheme or deadlines.  As we all know, rates can really only go one way and we’ve all been trying to second guess when this may occur.  I’m hoping this is not when it will kick start!   

Nationwide’s House Price Index suggests that property values increased by 0.6% in November compared to October.  The average property price is now £175k compared to £164k a year ago.

And finally, I’ve mentioned it a number of times throughout the year, but make no apology for mentioning it again!  If you have an Interest Only mortgage, do make sure you keep reviewing the options for repaying it back.  For a customer to get to the end of their mortgage term and still owe exactly the same as when they took it out, with no form of repayment apart from selling their property, creates a major headache for the lender, especially when they want their money back!  This will once again be a major part of lenders reviews in 2014, so be on top of your options, before the lender calls!  If in doubt, seek professional advice.