The falling cost of high loan to value mortgages is making it easier for first time buyers to get a foot on the property ladder and boosting the proportion of mortgages they account for.

First time buyer mortgages represented 14 per cent of all transactions at online broker Mortgageforce in November, an increase from the usual level of 10 per cent of mortgages.

And, reflecting the fact that finding a mortgage is gradually becoming easier, more than half of Mortgageforce’s first time buyers borrowed 85 per cent of the property value.

Katie Tucker, technical manager at Mortgageforce, said that without the bouncing back of 85 per cent LTV mortgages, half of the first time buyers who took them out in November would be facing higher rates for even higher LTV mortgage deals which are available, or would still be struggling to get on the property ladder.

Explaining the increase in availability of 85 per cent deals, Ms Tucker said: “Any lenders are increasingly able to take more risk now as their capital adequacy has improved.” And, she added, lenders’ “conservative attitudes thus far have resulted in their book of clients having very low average loan to value ratios.”

Mortgageforce’s data show that in line with higher LTV deals, first time buyers did not have to find such big deposits, putting an average 24 per cent of their own money towards the property purchase, compared to a 28 per cent average over the previous six months.

Ms Tucker continued to say that this leaves cash available for other things: “The more affordable 85% deals are also helpful to those buyers who have more cash available but choose to borrow a little more on the mortgage. The mortgage rates are relatively cheap compared to other credit and, whilst it is secured borrowing, the last thing you want is to start off by racking up five thousand pound in home furnishings on a costly credit card if you can keep cash aside for it instead.”

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