Following a historically low level of home owner loan and mortgage products at the beginning of last year, the number of available loan products on the market is continuing to increase, according to the latest product index from both Trigold and Mortgage Brain.

The whole of market home owner loan sourcing systems for financial advisers and loan brokers have reported that there has been an increase of 10 per cent in the number of home owner loan products available to potential borrowers, over the course of the past month alone.

The number of available loan products increased from 4,535 to 5,047 by the start of March. The number of products available to advisers and intermediaries increased by 11 per cent, compared with an increase of just 8 per cent for direct from lender loan products.

The figures from Trigold also showed that the number of home owner loans being sourced by intermediaries and loan brokers also increased dramatically, with around 10,000 more loans being sourced for clients in February, than there were during the previous month.

At the same time, the average monthly loan repayment amount has also increased slightly, partly due to higher interest rates on high loan to value products, but also due to individuals applying for a larger loan amount, as confidence slowly returns to the housing and home owner loan markets.

David Aylmer at Trigold commented on the figures, he said “There are currently 3,510 intermediary products on the market, compared to 1,538 direct showing that when it comes to choice intermediaries still have the edge.”

“Even though we are seeing mortgage payments rise, the fact that this is based on larger advances does show a greater degree of confidence in the market. Add to this the fact that we saw nearly 10,000 more sources in February than January and I think we have reason to be cautiously optimistic for business levels in the second quarter.”

A new survey has found that somewhere in the region of half of the adult population of the UK has no form of life insurance, or other policies which would provide an income, or support for their families in the event of their death or serious illness.

The research, which was carried out on behalf of Friends Provident, found that around 24 million individuals had no form of protection policy in place and the vast majority of those who did have cover, had a significant shortfall on the amount of cover they actually needed.

Many people take out some type of insurance for their home owner loan, or a payment protection plan for their other debts, such as their personal loans and credit cards, but in many cases this cover is inadequate or insufficient.

Due to the increased cost of borrowing, a growing number of people do not even have protection cover for their outstanding loans and other debts, claiming that they can not afford the premiums. The question should be, can I afford not to have protection cover on my loans?

Of those people who had taken out cover, whether this was for loan protection of family cover, 53 per cent only knew that they had cover, but had no idea about how much benefit they would actually receive or if this was a lump sum or income cover and how long would this last for.

Ed Stuart-Brown at Friends Provident said “It’s a sad fact of life that the unthinkable can and does happen and the last thing you would want is to leave yourself or your family in dire financial straits. I would also urge those who do have cover to dig out their policies and review their level of cover to ensure they have made adequate provisions should the unexpected happen. Unfortunately it’s too late to do anything about it once illness, accident or death occurs. If you are fit and well now is the time to act, the cost for most people is a fraction of the potential benefits they could receive and it’s a simple matter to review your needs with your adviser.”

Following a year of high interest rates and low loan to value ratios from banks and building societies on their ranges of home owner loan and mortgage products, many people have been relieved to see new loan products enter the market, which advertise lower interest rates and higher loan to value ratios from lenders.

Although this seems like good news on the face of it, according to new research from Moneyfacts, it appears that it is possible for a potential borrower to get a loan with either a cheap rate, or a high loan to value, but not both.

Although generally the average rate on a loan has reduced steadily over the course of the past few months, this is largely due to cheap loan rates being offered on home owner loan products which require a large deposit form the borrower.

It is true that there are a growing number of high loan to value products entering the market, but as average loan rates are decreasing, it seems that the average rate on a high loan to value product is actually increasing.

The average interest rate on a loan offering 90 per cent loan to value now stands at 6.48 per cent, compared with the average rate for a 75 per cent loan to value product of just 4.27 per cent. This means that someone with a 90 per cent loan is likely to pay somewhere in the region of £4,728 more than someone with just 75 per cent loan to value over a two year period, for the same amount of loan.

Michelle Slade at Moneyfacts said “While lenders are slowly increasing the number of deals available to those with a small deposit, which should be good news for first time buyers, they continue to make them pay a heavy price.”

“First time buyers are being offered little incentive to enter the market and there are no real signs of things getting better anytime soon for those with a small deposit.”

The Bank of England Base rate of interest for loans and savings has now remained at a historically low level for almost one year.

With the base rate still at just 0.5 per cent, those people who have chosen a variable or tracker rate for their home owner loan, or other personal loan, have seen their monthly repayment amounts fall significantly, in many cases helping them through the difficult times of the past twelve months.

But in December last year, the rate of inflation rose dramatically to reach 2.9 per cent (0.9 per cent above the Government target), thereby leading to fears that this could cause the Monetary Policy Committee (MPC) to increase interest rates to compensate for this rise.

But one economist has warned that increasing interest rates will have little effect on the rate of inflation and could actually be detrimental to those individuals with a variable rate loan, or for those looking for a new loan, with the possibility of pushing the UK back into recession just when we are starting to see some signs of recovery.

Charles Davis of the Centre for Economics and Business research (CEBR) commented that the recent increase in the Consumer Prices Index (CPI) was only a short term phenomenon which has been caused by factors such as the recent increase in the rate of VAT and the Bank of England should not take panic action against the increase.

Mr Davis thought that it was possible for the rate of inflation to increase above three per cent, although this should not be a cause for concern in the present circumstances. He said “That will cause Bank of England Governor Mervyn King to have to write to the Chancellor, but we really feel that this is a short term phenomenon.”

Many borrowers in the UK will be hoping for continued low interest rates, as an increase in the cost of their home owner loan could cause financial difficulties for many.

To say the least, it has been an interesting time over the course of the past couple of years or so in the homeowner loan and mortgage markets.

Although the situation seems to be steadily improving at the moment, there has been a distinct lack of available funding for new loans to individuals looking to purchase or remortgage a property. Banks and building societies have increased their interest rates and lowered the maximum loan to value they offer and with the Bank of England base rate of interest remaining at just 0.5 per cent for the past ten months, many borrowers finishing their initial deal on their home owner loan have chosen to remain on their existing lenders standard variable rate loan, rather than look at a more expensive remortgage product.

Although a large number of lenders have reduced their standard variable rate on home owner loans in line with the Bank of England Base rate, thereby passing on the savings to their loan customers, others have hardly altered their base rate at all and in some cases have even recently increased their standard variable rate, leading to a difference in cost of around £5,670 between the most expensive and the cheapest loan.

With a large difference between different lenders standard variable rates, it is almost impossible to say whether a borrower is now on a good rate with their home owner loan. With an increasing number of more attractive loan deals coming onto the market from lenders and the possible prospect of an imminent increase in the Bank of England Base rate having the effect of pushing up standard variable rates, now may be a good time for borrowers to review the rate on their current home owner loan deal and compare it with some of the deals on offer, to see if it worth moving to a new, cheaper loan.