Money Insider: Yorkshire Building Society opens the door for first-time buyers

During the first seven months of 2010 the competition among mortgage lenders has been intense, despite the housing market showing no meaningful signs of picking up.

Many of the recent rate reductions have been aimed towards borrowers with a 20 per cent plus deposit, with mortgage products for first-time buyers still not available from some high street lenders.

While 95 per cent plus LTV mortgages are unlikely to be found except in cases where additional security is mandatory, we are starting to see more lenders catering for those looking to buy their first property.

Last Friday, Yorkshire Building Society followed the moves earlier in the year from Post Office, Britannia and The Co-operative Bank with new 90 per cent loan to value mortgages, increasing the choice of more affordably priced home loans for those at the sharp end.

Moneynet research shows that the number of 90 per cent LTV mortgages has more than doubled in the last year, with over 160 products available today.

For a two-year fixed rate Yorkshire Building Society has launched a market leading 4.95 per cent with for two years or 5.69 per cent for a three-year option. Both products carry a £995 fee.

The two-year fix now joins the 4.99 per cent with £499 fee from Britannia and The Co-operative Bank as a best buy. If you feel more comfortable with a longer-term fix, there is a five-year mortgage from Britannia and The Co-operative Bank priced at a 5.89 per cent with a £499 fee.

Tom Girling, product manager at Yorkshire Mortgages, highlighted the reasons why the building society is only offering 90 per cent advances with a fixed rate.

"At the Yorkshire, we're trying to help as many people as possible obtain a mortgage and offering fixed rate loans to borrowers with a 10 per cent deposit is just one of the many steps we have taken to diversify our product range. However, by ensuring we only offer fixed rates in this area we can make sure our borrowers have peace of mind when it comes to their mortgage payments whether they are looking to buy their first property or remortgage."

It's good to see the competition which has driven rates lower in the mainstream mortgage market is gradually filtering through for those looking to take their first step on to the housing ladder.

Looking at the bigger picture, the volume of mortgage lending remains historically low and the forthcoming public sector spending cuts could put the dampers on any potential increase in demand for home loans.

However, conditions for would-be buyers is better than it's been for a while, with reports from Rightmove that sellers are dropping prices as more homes have come on to the market since Home Information Packs were axed.

Andrew Hagger is a money analyst at Moneynet.co.uk