“First-time buyer products have soared to their highest level since 2007, with the number of 90% and 95% loan-to-value (LTV) mortgages now totalling 723 products. This marks a 73% increase on five years ago, when buyers with small deposits only had the choice of 194 products.

“Surprisingly, Help-to-Buy (H2B) doesn’t account for all of these new products, but with the number of deals totalling 437 before the scheme was launched, it is clear that H2B acted as a catalyst for banks and building societies to get in on the act.

“With mortgage competition fierce, the average rates for 95% LTV deals have plummeted to the lowest on record, with the average two-year fixed rate now standing at 4.47%.

“The boost in numbers and the lower rates suggest that lenders are finally recognising the importance of first-time buyers, who have often been considered the life-blood of the housing market. As a result, borrowers need to try not to be swayed by the H2B scheme as the potential to find a better deal elsewhere is high. Many providers have now thrown down the gauntlet by not only offering a competitive rate but a great all-round package, which will help to lower the overall cost of the mortgage.

“This will come as a welcome relief to many borrowers who have struggled to find suitable mortgage deals within their financial capabilities. However, while it is great to see the availability of deals for small deposit holders increase, first-time buyers still lack the same choice as those with larger deposits, with banks continuing to favour less risky buyers.

“The improving higher-LTV market is also not an indication that riskier lending has returned, as the Mortgage Market Review is now firmly entrenched in bank policy, and only borrowers with a squeaky clean credit history and enough savings will be able to make the first step onto the housing ladder.

“Demand will always be high for these types of deals but it has never been more important for potential borrowers to prove that they can afford the mortgage.”

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