The 2 year fixed rate mortgage is available immediately at 3.99% with no arrangement fee and forms part of the Co-operative Bank's existing pledge to lend £360m to first-time buyers in 2012.
The Co-operative Bank has said that it is "committed at this time to using the [Funding for Lending] scheme to boost first-time buyer lending".
As part of its wider ambition to help people onto the property ladder, the bank has also partnered with Camden Council to launch a shared ownership scheme to help first-time buyers to combat high house prices in the region. In addition, the Co-operative Bank continues to offer borrowers a route into home ownership via its guarantor mortgages, which enable borrowing on the basis that a parent or guardian guarantees repayments, or through Share to Buy, which is a solution for those who wish to get a foot on the property ladder by buying with friends.
The news follows recent findings from the Which? Quarterly Consumer Report, which has found that 54% of people under 30 are concerned about their ability to get on the property ladder. The same report revealed that the average arrangement fee is now over £1400.
James Hillon, Head of Mortgages at The Co-operative Bank said:
"We welcome the FLS as a route to boosting the housing market and the wider economy, but believe this goal will only be achieved by increasing the availability of mortgages to first-time buyers rather than just focusing on remortgage customers."
"By offering a market leading rate fee free to those with a 10% deposit, we hope to remove some of the barriers to getting on the property ladder and offer first-time buyers a helping hand."
Which? executive director Richard Lloyd said:
"We have been calling on lenders to use the Funding for Lending Scheme to help first-time buyers and mortgage prisoners so today's news that The Co-operative Bank is to pass on this cheap finance to those struggling to get on the housing ladder is welcome.
"We want to see more banks follow their lead and pass on lower borrowing costs to all borrowers, not just those with bigger deposits or equity in their homes."
