Halifax, the UK’s largest mortgage lender, has started aiming its business towards buyers who can afford to put down a large deposit, enticing them with attractive rates.

The interest rates being offered to people with more money to put down as a deposit are lower than those available to homebuyers who have less money, making it increasingly difficult for those with low incomes and little capital to get on the property ladder.

Halifax are said to be ‘rewarding’ those who can put down a deposit of 25 per cent or more, according to the BBC, who account for about 70 per cent of the lender’s new mortgage customers.

This group will be charged one-tenth of a percentage point less than they would if they fell into the new tiers of interest for customers borrowing 75-90 per cent LTV (Loan to Value) and for 90-95 per cent LTV.

The 125 per cent and 100 per cent mortgages have both been removed from the market over recent weeks; from today, the highest loan-to-value for almost all buyers will be 95 per cent, down from 97 per cent, marking yet another measure from the mortgage industry to reign in lending, following yet another week of lenders withdrawing products and raising interest rates.

Those looking for a first time buyer mortgage, or those with no equity from their existing home as house prices fall, will now have to find at least five per cent of the house’s value for a deposit, compared to three per cent last week. With a current average Land Registry house price of £185,616, this is an increase from £5,568 to £9,280.

The changes are further evidence of the credit crisis taking it’s toll on lenders who are finding it harder to secure financing and making every effort to avoid the riskiest borrowers who are more likely to default on their repayments.

This move by Halifax reflects the mortgage changes that we have seen over the last couple of weeks,” said a senior mortgage analyst at Moneyfacts.co.uk.

“Lenders have to balance out the risk they are taking on, so it’s no surprise that Halifax are looking to attract the low risk borrowers.

“Increased rates on high loan to values spell bad news for first time buyers and remortgagors with little deposit. Anyone looking for a high loan to value is going to have a much harder time than they did 6 months ago.”

© Fair Investment Company Ltd