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FLS Helps Reduce Rates

Written By On 28/04/2013

More competitive interest rates have been introduced for mortgages and the arrangement fees associated with them are apparently also more reasonable now from lenders.

The Legal & General Mortgage Club, the company responsible for more than one in ten new mortgages in Britain, have conducted a survey relating to mortgages. It reveals that mortgage rates have dropped by over one per cent within the last three years, and they foresee further reductions in the next few months.

A major factor is the Government's Funding for Lending Scheme which is considered to be George Osborne's flagship. The way it works is the government makes cheap finance available to banks and other lenders to encourage the financial institutions to loan out more money. This in turn has produced more mortgages and small business loans being on offer at cheaper rates.

The Bank of England announced the FLS is to continue for another year and will now expire January 2015. They believe that the announcement will give a much needed confidence boost to the banks with expectations that property investors are next in line to take advantage of the scheme.

The largest increase accounted for by the BOE for approved mortgages were borrowers that had a loan to value of at least seventy five per cent.

Martyn Smith, mortgage products manager working at L & G Mortgage Club, feels that borrowers have a tough time deciphering all the fees associated with applying for a mortgage.

Mr. Smith believes that borrowers cannot always work out the exact sums they are paying for because

The term 'arrangement fee' has become particularly confusing, with some sources including product and arrangement fees plus property valuation fee, lender conveyancing fee and bank CHAPS payment fee in their calculations.