First-time buyers with relatively small deposits are finding it increasingly hard to get on the property ladder, new research shows.

The typical first-time buyer deposit is now 20% of the property’s value, the highest amount for a year and the same amount before Help to Buy was introduced

This is equal to 81% of their average annual wage as high-LTV lending goes into decline despite record low interest rates and greater product choice.

Buyers with small deposits still face mortgage payments that are 69% higher than those borrowing to 75% LTV or less.

The latest Genworth/Moneyfacts Mortgage LTV Tracker shows that the average first-time buyer house is now valued at £159,035, which means that a 20% deposit is equal to £31,807.

Despite Help to Buy, lending is actually decreasing with the average deposit size up from a low of 16% in October last year.

Genworth, a private mortgage insurer, said that June’s average deposit of 20% was the same as two years ago, before Help to Buy was introduced.

Factoring in house price increases over the last two years also means that in monetary terms, the average deposit has risen by 9% – or £2,557 – up from £29,250.

Across all buyers, the average LTV for house purchase loans also dropped by 2%, from 77% in May to 75% in June.

Genworth Vice President Simon Crone said: “Despite record low interest rates over the past few months, the lingering price gap between 75% and 95% LTV mortgages means those unable to stump up a 25% deposit – averaging almost £32,000 – face far higher monthly costs.

“For many, a deposit of more than 5% is simply not an option and failure to encourage lending at this level is resulting in a massive shortfall in first-time buyers.**

“Rising house prices and a lack of supply are exacerbating the situation and leave hopeful first-time buyers scrambling to save a deposit as quickly as possible, before the dream of homeownership gets any further out of reach.

“Help to Buy has encouraged greater availability of high LTV products but a rise in the average first-time buyer deposit shows limited take up and a lack of enthusiasm to offer high LTV mortgages from many lenders.”