Halifax will lower the minimum mortgage deposit required on new build houses to 5% from 10% on 1 July.

The UK’s largest lender says that “putting a sufficient deposit together is often the biggest hurdle first-time buyers face in getting on the housing ladder”, adding that its move “will make that significantly easier for many”.

It adds that based on the UK’s average house price of £289,099, according to the firm’s June House Price Index, the minimum deposit needed for a home could now be as low as £4,000.

The lender says that bringing the maximum LTV in line with existing properties also has the advantage of making greener homes more attainable for FTBs. Due to the higher standards required of homes currently being built, since 2012, their average energy performance certificate rating is B or better, compared to D or worse for homes built before 1982.

“This improved energy efficiency means owners of new build houses save over £500 per year on household bills per year,” says the company.

The firm has also removed the requirement that higher LTV new build loans, above 85%, come through developers on its panel. It adds that this will increase the availability of 5% deposit mortgages to houses built by more than 2,000 small housebuilders in the UK.

Finally, the lender says that shared ownership is an increasingly attractive choice for many of those struggling to get on the housing ladder, particularly where homes are above the national average. Buying part of the property initially and increasing that share at a point in the future, shared ownership “is another solution for FTBs who find the first step to home ownership difficult”.

The business says it will now accept a 5% deposit on both new build flats and houses in shared ownership schemes run by housing associations.

It adds: “Shared ownership is available where the share being bought is between 25% and 90% of the property’s value. Buyers can now borrow up to 95% of their share of the home with the lower deposit requirement.”

Halifax mortgage director Andrew Asaam says: “We recognise that getting a deposit together is still the biggest hurdle faced by most FTBs, and these changes could reduce the minimum deposit required on an average house to as little as £4000.”

“This also underlines our confidence in the new build market and our support for the UK construction industry. We have worked closely with the industry and listened to their needs to develop these changes.

“Just as importantly, supporting new build homes supports the drive to net zero by making warmer, greener homes more accessible and attainable for potentially thousands of new buyers.”

The government has set out a target to slash carbon emissions by 78% by 2035 compared to 1990 levels, and hit net zero by 2050.

Homes will play a major part in this, as the UK’s housing stock accounts for around 14% of the country’s emissions.