Average initial rates for borrowers at 90% loan-to-value (LTV) have dropped to 5.3% now from 7% in November, cutting monthly payments by £160 on a £150,000 loan.

However, the best-buy rates at 90% LTV are still more than double the average 2.58% charged for borrowers at 60% LTV, according to the online mortgage service.

The improvement in deals for borrowers at 90% LTV is due to lenders now offering tracker deals in comparison with November 2009 when only fixed-rate deals were on offer to customers with small deposits.

Lenders offering 90% LTV tracker deals include Nationwide, Skipton, HSBC, Santander, Cheltenham & Gloucester and Saffron Building Society. The only fixed-rate deal to make the top 10 best buys on total cost comes from HSBC with a two-year fixed rate at 5.99%.

Jim Barrowman, national accounts director at Evaluate Technologies, said: “It is a genuine sign of confidence that lenders are now willing to lend at 90% LTV and also that they are cutting rates for borrowers.

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“Clearly the deals on offer at 60% LTV are still substantially more competitive reflecting ongoing concerns about the housing market going into reverse and pressure on lenders to hold more capital in reserve for higher LTVs.

“However the revival at 90% LTV is to be welcomed and shows that gradually lenders are getting the message that if people with smaller deposits are creditworthy enough to qualify for a loan they should not have to pay too much of a premium.”