First time buyers still not welcome

Since January 2007 the number of mortgage products available at 90 per cent loan to value (LTV) has fallen by 97 per cent. Figures from moneysupermarket.com show just 102 mortgage products are currently available at 90 per cent LTV compared to 3,148 such products two and a half years ago.

And rates on 90 per cent LTV deals have actually increased marginally over the same period, despite the Base Rate falling from five per cent to 0.5 per cent. In January 2007, the average 90 per cent LTV mortgage deal was just 1.2 per cent above the Bank of England Base Rate, the average difference now is 5.73 per cent.

Louise Cuming, head of mortgages at moneysupermarket.com, said: "The Government has failed to get mortgage lenders to open their books to first time buyers. A 10 per cent deposit is all most first time buyers can hope to afford, so by pulling 90 per cent LTV deals off the shelf, and increasing rates on the remaining deals, providers are keeping first time buyers out of the market - which simply exacerbates market stagnation.

"Lenders remain for the most part entirely focused on how large a deposit potential borrowers can provide. However, if they were to take a more balanced view and place as much importance on affordability and credit profile, they could offer competitive deals with a higher LTV to those who clearly demonstrate they can and will make the required repayments."