Competition between lenders hots up

Many of the rate cuts have been reserved for borrowers with a 20 per cent deposit or more, with mortgage products aimed at the first-time buyer still not even on the menu from some high-street lenders.

While 95 and 100 per cent loan-to-value (LTV) mortgages are unlikely to be found except for a few non-standard products where additional security is mandatory, and quite rightly so, there has in the last week or so been some brighter news for those looking to buy their first property.

On Wednesday the Post Office followed the recent move from Britannia and The Co-operative Bank to offer new 90 per cent LTV mortgages, increasing the choice of very keenly priced products to support customers purchasing for the first time.

Moneynet research this week revealed that the number of 90 per cent LTV mortgages has in fact more than doubled in the last 12 months, with almost 150 such products available today.

For a two-year fixed rate Post Office is offering a now market leading 5.45 per cent with a 999 fee. If you feel more comfortable with a longer term fix, there is a five-year option from Post Office priced at a best buy rate of 5.99 per cent with a 999 fee.

It's good to see that the competition which has driven rates lower in the mainstream mortgage market is starting to filter through for those looking to take that step on to the first rung of the housing ladder.

It can only be good news for consumers to see the likes of Post Office entering the fray with a comprehensive range of over 40 products. This additional competition will keep other lenders on their toes and hopefully force down mortgage pricing even further.

The volume of mortgage lending remains at a very low level and the continuing economic uncertainty in the UK is likely to put the dampers on any potential increase in demand for home loans.

While the introduction of new first-time buyer products is welcome news, managing to scrape together a 10 per cent deposit in the current environment will unfortunately still seem a distant dream for many people, if not mission impossible.

Andrew Hagger is head of communications at Moneynet.co.uk