Figures from chartered surveyors e.surv found these borrowers made up 16.9% of the market in February, the largest proportion since September 2014.

The number of high loan-to-value loans completed in the month reached 10,300, a 10.7% rise compared to the previous month.

This figure grew in every area but the South East and Yorkshire.

Richard Sexton, director of e.surv chartered surveyors, said lending in the new year had been positive for younger borrowers.

“Lending to lower-deposit borrowers is back on track, which is encouraging as the mortgage market moves into spring,” he said. “Higher LTV borrowers took a nosedive in October as a proportion of the market, after the introduction of loan-to-income caps became a challenge for first-time buyers.

“But these buyers are evidently returning to the market to take advantage of low mortgage rates and cheaper stamp duty charges. And after the tricky bedding in phase that accompanied new mortgage legislation, first-time buyers are now once again accessing a market restructured for long-term viability.”

Across all parts of the market total loans increased for the third consecutive month but Sexton said the market was still behind the peak.

“Even with this revival, we’re safely below the high-tide mark of higher LTV lending seen back in 2007 – when smaller deposit borrowers made up around a third of total lending,” he added.

“The Mortgage Market Review has ensured that all future borrowers are subject to comprehensive affordability checks and given plenty of advice, and so the danger of them defaulting has been reduced. Many prospective borrowers are unable to save up a massive sum for a deposit – but they often still have strong monthly incomes and make attractive customers for lenders. Low deposits do not necessarily need to mean high risk.”