According to data released by the Council of Mortgage Lenders (CML), 216,200 people became homeowners for the first time during 2012, a 12% rise on 2011. This was the first time since 2007 that the number of first time-buyers exceeded the 200,000 mark.

The average loan-to-value level for first-time buyer mortgages remained at 80%, with the wider market figure also flat at 70%.

Lending to home movers also increased year-on-year, rising by 6.2% on 2011 figures to hit 540,200 during the year. These loans were worth £80.9bn, the largest annual total since 2007.

However, the CML data said that remortgage figures were well down on the previous year, with loans plummeting 16.2% to 313,500.

CML director general Paul Smee said: “Despite the seasonal dip in lending that we normally see in December, the underlying trend for year-on-year increases in house purchase activity continued in 2012.

“First-time buyers, in particular, have benefitted from the effects of better funding conditions and the Funding for Lending scheme, with the number of new people moving into home-ownership in 2012 reaching the highest level for five years. This, along with other factors, confirms that lenders really are open for business.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “It really has become a case of ‘how low can they go?’ as the mortgage price war continues to rage, even though Base Rate remains static. Two-year fixed rates are now available from 1.89%, while five-year fixes are pegged as low as 2.69%. Borrowers need to watch out for some hefty fees on the cheapest rates, while these are only available to those with big deposits.”

This announcement follows the release of research which showed building societies taking an increased share of lending in the past year and the news that the positive first-time buyer performance in 2012 looks set to continue into New Year.

Ashley Brown, director at Moneysprite, said: “If the mortgage market is going to see a bumper 2013 then first time buyers are crucial and lenders need to get onboard and recognise that they have a critical role to play.

“Lenders know that there are only crumbs left at lower LTVs. If they want to make any kind of margin then they have to target higher LTV loans. Either way, this latest data is welcome news for prospective and existing homeowners.”