First-time buyers have been hit with a double whammy as the availability of low-deposit deals has plummeted while rates on those remaining have surged since lockdown.

The number of mortgage deals for borrowers at 90 per cent loan-to-value has plummeted from 1,184 in before lockdown in March to just 78 today, while average rates for a two-year fixed in this category have surged by almost 1 percentage point from 2.57 to 3.54 per cent.

The analysis from Moneyfacts also found that five-year fixed rates for borrowers with a 10 per cent deposit had increased from 2.91 to 3.36 per cent over the same timeframe.

Over the past ten years the deposit put down by first-time buyers has increased by 25 per cent from £37,761 to £47,059, according to data from Halifax.

However, today average deposits are around a fifth of average house prices, while a decade ago they were closer to a quarter.

Moneyfacts finance expert Rachel Springall says: “First-time buyers may feel deflated to find a contraction in the market for higher LTV mortgage deals and to see property prices rise. 

“The average age for a first-time buyer is now 31, a year older than that of 10 years ago.

“Without the help from the Bank of Mum and Dad, it would not be surprising to see some prospective buyers to put their plans on hold until more mortgage deals enter the market that they can comfortably afford.

“Those first-time buyers who are paying rent may also be struggling to put aside a healthy portion of their disposable income towards a deposit for a home. 

“Indeed, according to HomeLet’s rental index, the average UK rent for new tenancies is £951 per month. 

“If borrowers are expected to amass a deposit of £47,000 over the next five years and have no savings, then they would need to put aside around £780 per month starting now.

“There are ways to boost a savings deposit, and consumers could get a max boost of up to £1,000 a year from the government with a Lifetime ISA – so this extra cash can be a vital injection.

“The low rates seen across the savings landscape are disheartening, but property prices can go up as well as down, and with mortgage products tightening, borrowers may only be able to stretch their savings so far.  

“As we have seen over the past six months, lenders have pulled many higher LTV deals, with some institutions leaving these sectors entirely, largely because of the high level of demand they are experiencing due to the Coronavirus pandemic. 

“Until matters settle, there is no clear sign of when these deals will return to the market, and with 1,108 fewer deals available than six months ago at 90 per cent LTV and above, it is clear to see how much choice has reduced for potential first-time buyers. 

“There are still some deals to choose from, and recently Virgin Money entered the market with 90 per cent LTV deals, over a seven and 10-year fixed term.

“If borrowers are adamant to get onto the property ladder right now, they could consider a guarantor or family assist mortgage.”