The average two year fixed rate for a borrower with a 10% deposit has increased steadily since April 2009, now standing at 6.48%, the highest level since December 2008.

By comparison, the average rate for a borrower with a 25% deposit stands at 4.27%, the lowest level since July 2009.

Michelle Slade, spokesperson for Moneyfacts.co.uk commented:

“While lenders are slowly increasing the number of deals available to those with a small deposit, which should be good news for first time buyers, they continue to make them pay a heavy price.

“On average, borrowers with a 10% deposit pay £4,728 more over two years than those with a 25% deposit.

“Lenders continue to cherry pick the best customers and appear to be actively discouraging borrowers with a small deposit from remortgaging.

“Figures out today show repossessions at a 14 year high and while some of this can be attributed to extenuating circumstances such as unemployment, many will be as a result of borrowers with little or no equity unable to find competitive financing.

“The cost of funding two year fixed rate mortgages on the swap rate market is at an all time low, but lenders continue to take an increasing margin of 4.85% on 90% LTV deals.

“First time buyers are being offered little incentive to enter the market and there are no real signs of things getting better anytime soon for those with a small deposit.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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