Average rates on high loan-to-value mortgages increased to 3 per cent in the final quarter of 2019, analysis by mortgage insurer AmTrust suggests.

The rate on 95 per cent LTV deals was up from 2.97 per cent in Q3, the research found.

However, the average rate at 75 per cent LTV was 1.44 per cent, down from 1.56 per cent in the previous quarter, narrowing the differential between the two LTV tiers from 1.56 to 1.41 percentage points.

The number of deals available for borrowers with a 5 per cent deposit increased from 260 to 268, based on someone buying a home priced in line with the UK average house price.

For borrowers with a 25 per cent deposit, the number of deals dropped from 1,830 to 1,762, AmTrust found.

Business development director Patrick Bamford says it is positive that high-LTV borrowers have a greater choice of deals.

But he says: “The more worrying trend remains an increase in average rates for 95 per cent LTV borrowers and an increase in the rate differential between these first-timers and those with a 25 per cent deposit. 

“We still see the latter group paying 50 per cent less each month in mortgage payments than high LTV borrowers, and this is a trend that shows no sign of changing.

“It means that any potential first-timer who wants to get anywhere near the most competitive rates in the market, needs a significant deposit to do so.

“At current levels that means having to save over £55,000, or be lucky enough to have the Bank of Mum and Dad to call upon – given this situation, it is perhaps not surprising that the number of mortgages available to those in such a fortunate situation continues to grow.”

Bamford warns that the UK is in danger of creating a housing market which can only be accessed by those with family support.

He says the March Budget is an opportunity to provide greater support for first-time buyers as the Help to Buy scheme is soon to be scaled back.

Bamford adds: “What we need to see is a greater focus on providing high LTV loans, not just for those starting their property journey but those already on the ladder who might wish to move up.

“Regulatory factors play a major role in curbing the amount of high LTV lending lenders can currently write, and we would like to see these addressed and amended, in order to allow lenders to write more business with those borrowers who do not have the support of family and friends to get on the ladder.”