First time buyers are gradually being welcomed back into the mortgage market with the introduction of more 90 per cent loan to value deals.

From today, HSBC is offering two 90 per cent mortgages aimed at first time buyers, including a tracker and a fixed rate deal, both with fees of £99.

The two year tracker mortgage follows 3.69 per cent above the base rate, currently costing 4.19 per cent, while the two year fixed rate mortgage has a rate of 5.09 per cent.

Both the new HSBC mortgages only require a deposit of 10 per cent of the property value, a sign that first time buyer mortgage criteria might be easing, after they were frozen out when the housing market crashed.

Martijn van der Heijden, head of HSBC mortgages, commented: “HSBC is keen to be there for new and existing customers, whether it’s for people looking to take their first step on the housing ladder or for people looking to improve on their current deal. We think we can reduce the cost of borrowing for most people and we think that’s what people are after in these difficult times.”

But some first time buyers who look like ‘perfect borrowers’ on paper are finding they are being rejected for mortgages, according to The Sunday Times, which has detected a pattern of aspiring homeowners being deemed unworthy borrowers because they are not existing customers.

Research for The Sunday Times also revealed that the struggle is not yet over for first time buyers, 11 per cent of whom have had to extend the terms of their loan in order to be granted a mortgage and afford the high rates that they are being offered.

“Ideal candidates” are being rejected, told by HSBC that they do not have the “credit score requirements”, but evidence suggests that it is their lack of history with banks that is affecting the outcome of their loan applications, giving existing customers almost exclusive access to the best mortgage deals.

© Fair Investment Company Ltd

Click here to compare the market and get quotes or see below for some of the latest deals »