IS the big chill that has frozen first-time buyers out of the housing market finally beginning to thaw?

And will it soon be possible to buy a first home without a massive £20,000 deposit or a handout from the “bank of mum and dad”?

The answer to both questions is a hopeful “yes” following the move by Nationwide, Britain’s biggest building society, to cut its 90 per cent loan-to-value (LTV) fixed rates by between 0.5 per cent and 0.7 per cent.

The largest reductions, to Nationwide’s two and threeyear 90 per cent LTV mortgages, are bound to help buyers with smaller deposits: two-year fixed rates fall 0.7 per cent to start at 4.49 per cent (4.39 per cent for existing customers); three-year fixed rates fall 0.6 per cent to start at 4.69 per cent (4.59 per cent); and five-year fixes fall by 0.5 per cent, with rates starting from 4.99 per cent (4.89 per cent for existing customers).

Nationwide is trimming other fixes and tracker rates by up to 0.4 per cent.

Despite the Nationwide’s move, however, lenders have faced fierce criticism after figures showed many of them were being tardy in taking up £80bn of cheap funding made available in the Government’s latest attempt to kickstart the economy.

The Bank of England figures showed that only six of the 35 lenders who signed up to the Funding for Lending scheme accessed any cheap funding in its first quarter.

Four banks – Barclays, Lloyds, Bank of Scotland and Santander – took a total of £3.75bn, while two building societies, Nationwide and Leeds, took a total of £610 million.

However, leading brokers detect a clear thaw in the air and they reckon that firsttime buyers could get even better deals early in 2013.

Nationwide claims that it was championing the needs of first-time buyers long before Funding for Lending took its bow.

Its lending in the first six months of the financial year to September 2012 provided £2.5bn to 20,000 first-time buyers, doubling the amount loaned in the same period last year and almost matching the amount loaned to 24,000 firsttime buyers in the whole of the previous financial year (2011-12).

For borrowers with a ten per cent deposit, The Co-operative Bank has a two-year fix at 3.99 per cent, with no fee.

For borrowers able to accept an 85 per cent LTV, the threeyear fix costs 3.79 per cent, with £999 fee.

On three-year fixes, The Cooperative Bank’s deal at 3.79 per cent compares pretty well against Nottingham Building Society (4.79 per cent and no fee to 90 per cent LTV) and First Direct (4.89 per cent and no fee to 90 per cent LTV).

Another leading building society, the Chelsea, a subsidiary of Yorkshire Building Society, has a range of options to make it easier for many first-time buyers to get their own home. Firstly, it has produced a range of two-year fixes from 75 per cent to 90 per cent LTV: a two-year fix at 2.99 per cent, with a 75 per cent LTV limit, has a fee of £1,495, while a 3.19 per cent loan, also with a 75 per cent LTV limit, charges a lower fee of £495.

Borrowers needing a 90 per cent LTV pay 4.49 per cent, with a £1,495 fee, while the 85 per cent LTV option costs 4.24 per cent, with an £495 fee.

However, these mortgages stand apart from the pack because they include a 1 per cent cashback on the value of the mortgage. This lump sum can help buyers to meet stamp duty charges, or other costs involved in buying a home.

Chelsea Building Society also offers an offset mortgage, which uses interest earned on savings to reduce monthly repayments, and which is available at the same rate as standard loans. Offsets are usually slightly more expensive.

Although prospects are clearly becoming brighter for first-time buyers, knowing exactly when to apply for a loan might still require a delicate piece of judgment and good timing.