UK mortgage approvals rise in January

UK mortgage approvals are at their highest level in the last 11 months with January of 2012 showing a high amount of approvals. This suggests that the Government Funding for Lending Scheme (FLS) may be actually helping home buyers get onto the mortgage market.

Bank of England figures show that mortgage approvals increased up to almost 55,800 in December compared to the 54,000 approvals from November. This is a larger jump then most analysts expected to see.

Overall net mortgage lending increased by about £1b which is the largest amount that lending has jumped since April. During the same time period interest rates also dropped to the lowest that they have been since last April.

The Funding for Lending Scheme was first introduced back in August of 2012 and since then the Bank of England has been hoping that it would help boost the credit flow to SMEs and households. They also hoped that it would help to hold the economy up after almost falling into a ‘triple-dip’ recession.

Outside of the FLS, the falling fixed rate mortgage rates may also be playing a role in the amount of people shopping for mortgages. Yorkshire Building Society for example has released a 1.99% fixed mortgage and Britannia is offering a five year fixed starting at 2.9%. During the same time last year the best deal on the market for a five year fixed was about four percent.

Experts believe that the FLS could continue to help stimulate the market and even drop some two year interest rates down to 1.5% for qualified candidates. Although home mortgage rates are looking good, there is not as much evidence that the FLS is helping out businesses although at least one measure suggests that lending to SMEs has fallen the least it ever has over the last year.