First-time buyers have been left behind while lenders have waged a rate war to attract borrowers with substantial equity or deposits.
The number of mortgages requiring just a 10 per cent deposit has plunged by 26 per cent over the last year, ending a gradual improvement in the availability of 90 per cent loan-to-value deals.
The number of mortgages needing just a 5 per cent down payment has fallen by 43 per cent in the last six months alone, according to research by MoneySupermarket.
It said the total number of first-time buyer deals has fallen by almost a third to just 1,225 over the last year.
Clare Francis, mortgage expert at MoneySupermarket, said: “Our analysis shows the continuing difficulty facing first time buyers and those with smaller deposits looking to find a suitable mortgage. Despite the launch of the Funding for Lending Scheme which was designed to encourage further mortgage lending by the banks, there appear to be few signs that the initiative is helping those with small deposits.”