First-time buyers who only have a small deposit are cashing in on better mortgage deals as lenders bid to win their business.
Research by moneyfacts.co.uk has revealed that the average two-year fixed-rate mortgage available to those with a 5 percent deposit - meaning they need a 95 percent loan - is down from 3.95 percent to 3.41 percent.
Building societies in particular are targeting FTBs, with a fixed-rate repayment available for two years on 3.35 percent.
The competitive rates on offer mean FTBs who are struggling to pull together a bigger deposit do have a bigger range of options when they start to shop around for their loan deal. And, in fact, the current rates are a benefit to those with a small deposit because a two-year fixed-rate mortgage for FTBs who can put down 30 percent of the purchase price has gone up from 2.35 percent in the summer to 2.49 percent today.
Darren Cook, moneyfacts.co.uk's finance expert, said: "Borrowers with a modest 5 percent deposit have seen the maximum 95 percent loan-to-value average fall from 3.95 percent to 3.41 percent, which is fantastic news for prospective first-time buyers looking to get their foot on the property ladder.
"There clearly seems to be a concerted drive by mortgage providers to try and secure the business of potential first-time buyers, who are the lifeblood of the mortgage and property markets, and it is encouraging to see rates decrease as a result of some healthy competition."