Following feedback from its customers, Barclays will the new loan called Family Springboard on Monday 14 January to help boost the first time buyer market this year.
Elsewhere mortgage rates will be slashed by up to 1% from tomorrow giving home owners access to the cheapest mortgage deals Barclays has ever offered.
Barclays said that it is committed to continuing to help first time buyers get on the property ladder at a time when although lending to first time buyers is at the highest point since 2008 it's still way off the peaks of 2007.
The biggest hurdle facing first time buyers is the size of the deposit and the monthly mortgage payments. Barclays believes that its Family Springboard mortgage will help combat these issues.
The new products comes in two parts: It provides first time buyers with a competitive three year fixed rate available with a 5% deposit at 4.69% whilst their family opens a savings account linked to the mortgage into which they put 10% of the purchase price. When the three year fixed rate ends the savings are returned to the family.
In terms of the cheapest deals Barclays has ever offered, there will be a three year fixed rate deal for those with a 30% deposit, which sees the largest cut of 1% to 2.89%. The two and five year fixed rates Barclays will be offering are priced at 2.39% and 3.39% for those with a 40% and 30% deposit respectively.
Key reductions are also being made on the Great Escape remortgage package for those borrowers whose monthly payments were hit by competitors increasing their Standard Variable Rate (SVR) last year. They can remortgage with a two year fixed rate deal where the rate has been cut from 3.49% to 2.99%.