First time buyers need less money to secure a mortgage as deposits have dropped at a rate of three per cent a month, Mortgageforce has revealed.

In June, the average mortgage deposit for a first time buyer was 28.6 per cent, but this fell to around 25 per cent in July and in August it fell to just over 21 per cent.

Katie Tucker, technical manager at Mortgageforce expects lenders to continue offering improved rates to borrowers, she said: “More generous deals are available; the ongoing stability of house prices reduces the risk of negative equity and repossessions that lenders are keen to avoid, so we should see more accommodating terms from them now.”

Mortgageforce also found that borrowers looking to secure a 90 per cent mortgage could benefit from HSBC’s discount rate of 3.89 per cent for two years for a £1,199 fee, but Ms Tucker urged first time buyers to be “wary” of these types of mortgages.

“Be wary that, unlike ‘trackers’, ‘discount’ rates may increase even if the official Bank Rate (currently 0.5 per cent) does not: because they are a discount from the lenders’ own SVR rate, which is changeable entirely at their own whim,” she said.

Before going on to say: “Although tracker and discount rates are looking very low currently, first time owners or anyone on a restricted budget should consider very carefully whether they could continue to afford their mortgage payments if that rate does increase by a few per cent.”

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