There has been a 22 per cent increase in the number of products available for first time buyers since the start of this year. The biggest increase has been in the number of mortgages available at 80 per cent loan to value (LTV) with a 76 per cent rise since January.
There is also good news on the rate front, with the average rate for 90 per cent LTV products dropping by 0.33 per cent to 5.82 per cent since January.
The average rate available on loans up to 85 per cent LTV has fallen by 0.96 per cent to 5.02 per cent; meaning a first time buyer with a £150,000 mortgage at 85 per cent LTV will now be repaying £878.63 a month, compared to £964.62 in January.
It is not all good news however, as the average rate for 95 per cent mortgages has increased by 0.2 per cent. Also, we have only seen a small increase in the number of products available in the 85, 90, and 95 per cent LTV categories, which mean many would-be first time buyers are still struggling to get onto the property ladder.
Clare Francis, site editor of moneysupermarket.com, said:
"It's encouraging to see the number of mortgages available for those with reasonably small deposits increasing, but there is still a premium on rates for loans available up to 90 per cent discouraging many first time buyers.
"The best rates are still only available to those large deposits - you need at least 25 per cent and in some cases 40 per cent to qualify and this is pricing many out of the market.
"First time buyers are integral to keeping the housing market moving - if there aren't enough people jumping on at the bottom the market will eventually grind to a halt. A shortage of first time buyers is evident around the country with many people struggling to sell their properties.
"Unless more lenders start offering 90 per cent mortgages at affordable rates, it is difficult to see how this will be resolved. Increased competition would also help to push rates down, bringing the cost of mortgages available at high LTVs closer to the market-leading deals.
"Despite Base Rate having been left on hold at 0.5 per cent again this month, an increasing number of economists believe interest rates will start rising sooner rather than later. Anyone thinking of buying for the first time may therefore be better off acting sooner rather than later as mortgages rates are likely to go up too.
"The housing market is also fairly subdued at the moment as the build up to Christmas starts, so it could be a good time to buy as sellers may be more than willing to negotiate on price."
