The Government’s Funding for Lending Scheme (FLS) opened for business on 1 August with the number one aim of kick-starting the economy by making mortgages and SME lending much more accessible. To date, 30 lenders have taken up the offer of access to cheap loans.

Sylvia Waycot, finance expert at Moneyfacts, said: “Before we all stick the bunting out, the FLS isn’t panning out quite the way you might expect. For instance, the first-time buyer market has not benefited from any dramatic change of fortune. In July 2012, prior to the FLS launch, there were 389 mortgages at 60% loan-to-value (LTV) to choose from and 263 at 90% LTV. Today there are 498 mortgages at 60% LTV, an increase of 109, whereas there has been an increase of just 21 in the 90% LTV bracket.

“Added to this, the average two-year fixed rate for a 60% LTV mortgage has fallen by 0.52% (4.47% in Aug 12 - 3.95% today), whereas the equivalent 90% LTV rate has fallen by a paltry 0.22% (5.49% in Aug 12 - 5.27% today).

“It may well be time that the Government re-evaluated FLS and rather than give a wide remit of making mortgages more accessible, narrowed it down to offering more mortgages in the higher LTV areas rather than the already well-serviced, less risky 60% LTV market.

“A first-time buyer with a deposit and a secure job is not a high risk; it is just someone trying to get a foot onto the housing ladder.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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