The number of mortgages available to those with a limited deposit has risen to its highest level in over two and a half years, bringing hope for first time buyers who tend to have smaller down payments.

There are now 312 products for those looking to borrow up to 90% of their home's value, according to price comparison site This represents an increase of 17% since June.

Key Points

  • 17% rise in 90% mortgages since June
  • Last time there were over 300 such products available was Nov '08
  • Average rate on fixed 90% mortgages dropped 0.53% in past year

Such products are suitable for those with a 10% deposit, though lenders often require an even better credit record than on other home loans so they are not always easy to secure.

They also tend to come with higher interest rates than deals for those with larger down payments. The last time there were over 300 products available was in November 2008.

Rates falling

As well as an increase in the number of mortgage products available, the average rate on 90% mortgages is falling.

The average rate on fixed rate mortgages has dropped 0.53% in the past year to 5.87% this month, according to Moneysupermarket. It has dropped 0.17% since last month.

Tracker mortgages at 90% loan to value are now more expensive than a year ago, but the average rate, at 5.5%, has dropped 0.22% since June.

Clare Francis, from Moneysupermarket, says: "There is a severe shortage of first time buyers at the moment and one of the reasons for this is because it's been so difficult to get a mortgage unless you had a deposit of 25% or more.

"It's therefore encouraging to see an increase in the number of 90% and 95% mortgages. That said, we are still a way off the number available pre-credit crunch and those with smaller deposits still have to pay a higher rate of interest."