HSBC has given a boost to first time buyers with the launch of competitive new mortgage deals requiring only a 10 per cent deposit.

The bank is offering a two-year fixed rate home loan worth up to 90 per cent of a property's value at 4.99 per cent, with a fee of £1499. The next best-buy deal with a loan-to-value (LTV) ratio up to 90 per cent is from Yorkshire Bank, at 5.99 per cent.

However, the lender has been criticised for the strings attached to the new mortgages. Only HSBC Plus or Premier current account customers can apply for competitive new rates. HSBC Plus, a packaged account, costs £12.95 a month. Premier accounts have no monthly charge, but customers are required to earn at least £75,000 and hold at least £50,000 in savings and investments with HSBC.

The cost of joining HSBC Plus over two years is more than £300, which buyers have been urged to factor in when comparing the deals with other loans on the market.

Melanie Bien, director of Savills Private Finance, the broker, said: "Moving your account is a hassle but these rates are competitive and considerably better than the rest of the market. HSBC is in a unique position because it has come through the credit crunch as one of the stronger lenders. These new rates lay down the gauntlet to other lenders to lower rates, although most other banks and building societies are unlikely to be able to compete."

Royal Bank of Scotland (RBS), which is majority owned by the taxpayer and Abbey, the UK's second biggest lender, have recently targeted first time buyers with new deals which require small deposits. Last week RBS launched a five-year fix for borrowers with a 10 per cent deposit at 6.69 per cent, while Abbey unveiled a first time buyer deal available up to 85 per cent of a property's valuef, with a rate of 5.84 per cent.

The interest rates on the latest deals remain considerably higher than the Bank of England base rate, which is currently 0.5 per cent. New banking rules mean that lenders need to hold ten times as much in capital to back a 90 per cent LTV mortgage as a 60 per cent LTV home loan. Banks and building societies have also watched nervously as house prices continue to fall. Nationwide reported a 17.8 per cent year-on-year fall in February, although it said that prices rose 0.9 per cent last month.

Other deals unveiled by HSBC today for buyers with a 10 per cent deposit include another two-year fixed rate loan at 5.49 per cent, with a smaller £199 fee and a lifetime tracker pegged at 4.09 points above base, a current pay rate of 4.59 per cent, with a £999 fee. All these deals are only home purchases, rather than existing homeowners who are looking to remortgage.

Michelle Slade, of Moneyfacts.co.uk, the financial website, said: "HSBC is the first provider to return to offer tracker mortgages at 90 per cent LTV and although it is a considerable margin above base, there are no exit fees if interest rates begin to rise."

HSBC, which carried out a £12 billion rights issue earlier this week, has allocated £1 billion to fund the new deals from a total port of £15 billion for new mortgage lending in 2009, 20 per cent more than 2008 and double the amount it lent in 2007.

Last week HSBC announced a new two-year fix for borrowers with a 40 per cent deposit at 2.49 per cent and a three-year fix for borrowers with a 25 per cent at 3.99 per cent.

Joe Garner, of HSBC, said: "Although house prices have fallen, and continue to fall, they won't fall forever. At HSBC we are standing by our customers through thick and thin and these changes mean we can continue to give customers the best possible deal on their mortgage."

The new deals will be welcomed by thousands of disenchanted first-time buyers, who have been blocked from the house market by a lack of competitive home loans.

The number of deals available up to 90 per cent LTV has fallen every month for the last year, dropping from 1,197 deals in February last year to just 93 this week, according to Moneyfacts.co.uk. Lenders have instead favoured mortgages that require a 40 per cent deposit. The number of deals on the market has jumped from only 24 a year ago to 413 today.

Last week HSBC announced that it was taking on mortgage brokers with the trialling of a new "whole of market" advice service available to customers in its branches.

The lender will charge customers £150 to speak to a Mortgage Matcher consultant, who will offer impartial advice on the best mortgage deals available, including those from rival lenders. Customers who go on to take out a home loan from HSBC or First Direct, its online-only banking brand, will still be charged the fee.