Mortgage deals surge as ‘funding for lending’ scheme takes effect

Last month saw the greatest number of mortgage deals on the market since September 2008. The number of mortgage “products” available at any time is viewed as an index of competition among lenders for business, so also a good indicator of confidence and activity in the housing market.

Research by broker the Mortgage Advice Bureau, which tracks deals through its National Mortgage Index, said it recorded 10,262 deals available in July which represented a 198% increase in consumers’ choice since the bottom of the housing slump in July 2009. Fewer than 4,000 deals were then offered as lending contracted sharply in response to the “credit crunch” and falling property values.

The rapid increase in loan availability is thought to be largely down to the Government’s Funding for Lending Scheme, which commenced in the middle of 2012 and made funding available to lenders at significantly lower cost than if the lenders had to raise it through the traditional sources of retail deposits or capital markets.