First time buyers have been given a welcome boost after it was revealed rates on mortgage deals requiring a 10% deposit have fallen below 6% for the first time since March 2008.
New research from Moneyfacts.co.uk has shown that the average rate on a two year fixed rate mortgage at 90% loan-to-value (LTV) currently stands at 5.98%.
It means the cost of such a mortgage deal has fallen by 0.4% over the past 12 months.
The fact that there are also 41% more mortgage deals requiring just a 10% deposit available today than a year ago is also good news for first time buyers.
At present, 229 such deals are on offer, from 48 different mortgage lenders.
While mortgage rates at all LTV levels have fallen compared to this time last year, it is the 90% LTV tier that has seen the biggest fall.
Rising demand from first time buyers for such mortgage deals is credited with increasing competition amongst providers, and rates ultimately falling as a result.
"The news will be a boost to first time buyers who have been left with limited options in the last few years," said Michelle Slade, spokesperson for Moneyfacts.co.uk.
Ms Slade added that Skipton Building Society has provided further help to those borrowers with just a 5% deposit after it became the first lender to offer rates lower than 6.00%, without the need for a guarantor, since the peak of the credit crisis.
HSBC and Yorkshire Building Society are amongst the lenders willing to lend to borrowers with just a 10% deposit, while Woolwich and first direct have mortgage deals open to those with a 15% deposit.
However, despite the mortgage market continuing to show some welcome signs of improvement for those with a smaller deposit, Ms Slade warned that the picture is not entirely rosy.
"Just because the products are on the shelf, it doesn't mean that they are within easy reach," she added.
"Mortgage availability may be improving, but mortgage approval figures remain subdued.
"The mortgage market still has a way to go before it returns to any sort of normality."
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