On September 1, the average two-year fixed rate was 4.24pc but has since risen to 5.45pc, according to analyst Moneyfacts. The average five-year rate was 4.33pc two years ago but is now 5.12pc.
David Hollingworth, of L&C Mortgages, said: “Building an adequate deposit is hard enough especially when the available mortgage borrowing is capped, and prices remain high. Opening the potential for higher borrowing amounts for the right borrowers will help target the twin challenges that first-time buyers face across the UK.”
Nationwide has also cut rates across its fixed-mortgages, becoming the first lender to offer sub-5pc rate for first-time buyers with a 5pc deposit. The Building Society is offering a five-year fixed rate at 95pc LTV at 4.99pc with a £999 fee.
It is also offering a five-year fixed rate at 90pc LTV at 4.49pc with the same fee.
Since April 2021, the average loan size for first-time buyers without Helping Hand is £168,699, whereas for those benefiting from Helping Hand, the average loan size is around 60pc higher at £269,169.
Helping Hand is available to single buyers with a minimum income of £30,000, while joint applicants must earn a combined salary of £50,000.
Falling rates and growing consumer confidence have bolstered the housing market this year, with younger buyers driving demand.
Research by Savills shows first-time buyers accounted for nearly a quarter of housing market spending in the three months to July. It represents the group’s biggest market share for eight years.
On Thursday, the Bank of England’s Monetary Policy Committee voted to hold its Bank rate at 5pc, but the market expects at least one further cut before the end of the year raising hopes that mortgage rates will fall further.