The average loan taken out by first-timers grew from £112,500 in May to £117,000 in June, which the CML attributed to the increase in property prices in recent months.

It reported that in May 37% of first-time buyers bought a home for less than £125,000, while in June that figure fell to 34%.

Despite the increase in average loan size, typical first-time buyer mortgage repayments accounted for 19.3% of income in June – unchanged from May.

The CML said this was a result of increasing incomes and falling interest rates. The average loan to value of mortgages taken out by first-time buyers increased very slightly from 80% in May to 81% in June.

First-time buyers accounted for 46% of all mortgages taken out to buy property in June, up from 44% in May and a big increase on the 38% seen on average since 2007.

Other lending

The number of mortgages advanced to home movers also increased annually, rising by 6% between last June and this June, while on a quarterly basis the number increased by 27% between Q1 and Q2 this year.

Lending for house purchase increased too, up 16% between last June and this, while on a quarterly basis the number of loans advanced grew by 30% between Q1 and Q2.

Remortgaging dropped slightly in June. With fixed interest rates falling, a record 86% of borrowers opted for fixed deals in June, the highest proportion for at least 20 years.

Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said:

“With another rise in loans to first-time buyers in June, this section of the market is looking stronger than it has done for some time. But even though affordability does not appear to have suffered from the recent growth in house prices, this may be because higher-earning borrowers have been mostly responsible for the surge in first-time buyer activity.

“Average fixed rates are significantly lower across two, three and five year products than they were this time last year, and the latest data shows average five year fixed rates at 3.83% – the best we have seen in recent memory. The Bank of England has signalled that interest rates are likely to favour mortgage borrowers for the foreseeable future, but with rates this good, fixing still looks like the most appealing option for long-term security.

“Many lenders are primed for a busy end to the year as they chase ambitious targets. With new lenders entering the market and plenty of capital from the Funding for Lending Scheme to bring into play, the range of borrowing options is likely to improve even further across the board.”