Its latest research has revealed that average initial rates for borrowers with deposits of 10% dropped to 5.3% in February from 7% in November. On a £150,000 loan, this has cut monthly payments by £160.

The improvement in rates is due to increased market competition at 90% LTV with lenders offering tracker deals, whereas in November 2009, only fixed-rate deals were on offer to customers with small deposits.

Jim Barrowman, national accounts director at Evaluate Technologies, said it was a genuine sign of lending confidence. However, he pointed out that the best-buy rates at 90% LTV are still more than double the average 2.58% which was charged for borrowers at 60% LTV.

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

However, Fahim Antoniades, group distribution director at Mortgage Centre IFA, said there was a lack of interest in 90% LTV deals as they were still too expensive.

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He added: “Despite the fall in rates, there has not been a significant increase in the take-up of these deals. The rates are still too high and borrowers seem to want to put up higher deposits and take lower LTV deals.”