Most first time buyers in the UK have very little to put down by way of deposit on a mortgage, and this is because they have no previous property from which to use equity towards a deposit. In the past this has not proven too much of a problem, as many first time buyers have been able to access 100% mortgages – or even 125% mortgages – which has meant that they could get away with little or no deposit.

Last month a number of lenders announced that they were taking their mega-mortgage deals – those for 125% and in some cases those for 100% - off the market, which meant that first time buyers suddenly found themselves very restricted when it came to choice. However, the situation has become even worse, with some lenders now asking for more than the traditional 5% deposit, making it even harder for first time buyers to raise the deposit that they need.

Although some lenders are still offering 95% mortgages, it is thought that anyone unable to put down a larger deposit is likely to get stuck with the most expensive rates of interest, and first time buyers are likely to be amongst the hardest hit by this situation. The most competitive deals on offer from mortgage lenders are being reserved for those that are able to put down hefty deposits, such as 10% or 25% - one lender has even reserved the best deals for those putting down a minimum of 40%.

One industry official said: ‘Banks are clearly now engaged in more active risk-pricing when it comes to mortgage lending, with riskier borrowers failing to benefit from the fall in expectations of policy rates. For first-time buyers this could clearly be a problem.’

Recent additions:

• Addition liquidity for banks through injection of cash
• Impressive figures on buy to let mortgages
• Advice given to potential home purchasers
• Many first time buyers facing soaring mortgage rates

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