First time buyers still not welcome

Figures from moneysupermarket.com show just 102 mortgage products are currently available at 90% LTV compared to 3,148 such products two and a half years ago.

And rates on 90% LTV deals have actually increased marginally over the same period, despite the Base Rate falling from 5% to 0.5%. In January 2007, the average 90% LTV mortgage deal was just 1.2% above the Bank of England Base Rate, the average difference now is 5.73%.

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% deposit is all most first time buyers can hope to afford, so by pulling 90% 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."