Borrowers with a 10% deposit have seen just a 0.12% drop in the average mortgage rate, despite the cost of funding to lenders falling 4.35%, reports Moneyfacts.

But those who can stump up a 40% deposit have seen a 1.86% reduction in the average mortgage rate.

Borrowers with a 10% deposit taking out a new two year deal on a £150,000 mortgage will only see their monthly repayment fall £11 from £988 to £977, while those with a 40% deposit see a reduction of £165 per month from £998 to £833.

Michelle Slade, spokesperson at Moneyfacts.co.uk, said: “A higher margin for risk is expected on a 90% LTV deal