Mortgage lending figures released by the Bank of England and the regulator showed that the effects of the Mortgage Market Review (MMR), launched in April, have yet to filter through the mortgage transaction process.

Lloyd Davies, of the Conveyancing Association and managing director at Convey Law, said it typically takes between eight and 12 weeks from when a sale is agreed to the date of exchange when funds are released. This lag means Q3 is expected to reflect the impact of the MMR regulatory changes.

Davies said that due to the swathes of new sales instructions received in spring, typical of the season, completions up until August are likely to remain strong but September will begin to present a more subdued picture.

“Over the last three months, we believe that new property instruction figures have been down by around 10 to 13%,” said Davies. “There are a number of reasons for this – amongst them the introduction of more stringent mortgage application rules in April, alongside a possible rise in interest rates, coupled with the seasonal summer dip in instruction figures.”

Fixed rate mortgages continued to be the dominant product choice, increasing for the seventh consecutive quarter to 82% of gross advances in Q2.

The value of first-time buyer loans increased by £3.4bn over the past year to £11.4bn in the quarter, accounting for 22.1% of the market in Q2 2014 up from 20.1% in Q1 2014.

Compared with Q1 2014, the proportion of gross advances to borrowers with a single income multiple of more than four times increased by 30bps to 11.9% in Q2 2014.

But Simon Crone, vice president – mortgage insurance europe for Genworth, said lending to this group of buyers was still at a low level.

“First-time buyer lending still amounts to just 22% of activity when it once averaged 40%, so it is no surprise that owner-occupation has suffered as a result,” he said.

“The recent rise in loans with a high loan to income multiple shows how affordability continues to be stretched by rising house prices and subdued wages.

“Actions from the Bank and individual lenders following the MMR have been designed to keep the associated risks in check, but the UK market is clearly facing a juggling act to balance support for homeownership with maintaining financial stability.”

Buy-to-let lending increased to £7bn in Q2 2014. This was the highest quarterly amount since Q2 2008.

Although the buy-to-let proportion of lending decreased from 14.4% in Q1 2014 to 13.6% in Q2 2014, this represented an increase over the past year of 1.5 percentage points.