Britain's number one comparison site found the number of mortgages available for borrowers has continued to rise over the past few months and mortgage rates have fallen. The total number of mortgage products available six months ago (May) was 2,365 compared to 2,373 when the Scheme started. Currently there are 2,781 mortgages available - an increase of 17 per cent since August.
Further analysis shows that since May, there has been a 46 per cent increase in the number of 60 per cent LTV mortgages available, rising from 290 to 424. The average rate on 60 per cent LTV mortgages has fallen 0.48 percentage points since May to 3.43 per cent. For 80 per cent LTVs, there has been a 20 per cent increase, from 389 to 467. However, despite the sharp increase in the number of 80 per cent mortgages available, the average rate has actually only fallen 0.09 percentage points to 4.01 per cent.
There has also been good news for first time buyers and those with small deposits as the number of 90 per cent mortgages has increased since the Funding for Lending scheme started in August, after a sharp fall from May. There are now 258 90 per cent mortgages available compared with 242 in August - although in May there were 274 - and the average rate has come down slightly from 5.33 per cent in May to 5.21 per cent. On 95 per cent mortgages, there are six more products now than there were in August. However, while the choice is greater, the cost of 95 per cent mortgages has actually risen by 0.01 percentage points to 5.83 per cent.
November also saw a rise in the number of two and five-year fixed rates available, with the addition of 37 and 58 new products respectively this month compared to October.
Clare Francis, mortgage expert at MoneySupermarket said:
"The Funding for Lending Scheme definitely seems to be having a positive impact on the mortgage market. Our analysis shows there are now many more mortgages available than there were six months ago, although it is those borrowers who have the largest amount of equity in their homes who continue to benefit the most.
"That said, it is great to see that a number of lenders, including Santander and The Co-operative Bank, have launched new 90 per cent mortgages in recent weeks and that Nationwide doubled the amount it lent to first time buyers between March and September. Many lenders claim their doors are open for business but the perception has often been different, particularly for first time buyers and those with only small amounts of equity in their homes over the past few years. Let's hope that these moves indicate 2013 will be a better year for those trying to get a foot on the property ladder."
The MoneySupermarket analysis also found fixed rates on mortgages have fallen, with rates on two year fixed products falling from 4.30 per cent in May, to 3.81 per cent, and five year fixed rates falling from 4.72 per cent to 4.26 per cent. The fall, although welcome, masks the true picture of the total cost of a mortgage, offset by the rise in the cost of fees. Average total fees for a five year fixed mortgage have increased from £1,091.05 to £1,189.64, a 9 per cent increase since May. This means many borrowers could pay more for their mortgage despite lower rates.
Clare Francis continued: "Don't be duped by a low headline rate when looking for a mortgage as it may mask a high set up cost. A high arrangement fee may be worth paying but it will depend on the amount you are looking for borrow. When comparing mortgages is it vital to work out the total cost over the term of the deal - that is the monthly repayments plus the arrangement fee. We may have seen more products launched and rates come down since the Funding for Lending Scheme was introduced but because fees have gone up in many cases it isn't necessarily resulting in cheaper mortgages."
