The mortgage market is still a cold an uninviting place for first time buyers, as, according to analysis from moneysupermarket.com, high loan to value (LTV) mortgage deals have fallen 97 per cent in the last two and a half years.

Moneysupermarket.com has found that there are just 102 mortgages left at 90 per cent LTV, compared to there being 3,148 products on the market two and half years ago.

This marks a decrease of 97 per cent in the 90 per cent LTV market since January 2007, while rates on these loans have increased, despite numerous cuts in interest rates from the Bank of England, and calls from the Government to increase mortgage lending.

The Bank of England has reduced the base rate by 4.5 per cent in the same period, but the cost of borrowing has continued to increase for many homeowners, and especially for first time buyers.

First time buyer mortgages now charge an average 5.73 per cent above the current base rate of 0.5 per cent, compared to just 1.2 per cent higher in January 2007.

“The Government has failed to get mortgage lenders to open their books to first time buyers,” according to Louise Cuming, head of mortgages at moneysupermarket.com.

“A 10 per cent deposit is all most first time buyers can hope to afford, so by pulling 90 per cent LTV deals off the shelf, and increasing rates on the remaining deals, providers are keeping first time buyers out of the market – which simply exacerbates market stagnation,” she said.

A significant deposit remains the primary focus for the majority of mortgage lenders, Ms Cuming continued, rather than on offering affordable loans to those trying to get a foot on the property ladder.

If mortgage lenders were to adopt “a more balanced view and place as much importance on affordability and credit profile, they could offer competitive deals with a higher LTV to those who clearly demonstrate they can and will make the required repayments.” she concluded.

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