Lending to first-time buyers reached its highest level since 2007 in the final three months of last year as government measures encouraged more activity.
Some £10.6 billion worth of loans was advanced to first-time buyers in Q4 2013, which represents a year-on-year increase of 41 per cent, newly-released figures from the Bank of England show.
The early introduction of the second phase of the Help to Buy scheme, coupled with an increase in the number of high loan-to-value products being introduced into the market, has helped to tempt more people into buying a house.
Consumers are also finding it easier to get mortgages with smaller deposits, although this has sparked fears among some commentators that another housing bubble could be created.
Gross advances stood at £1.5 billion in the final quarter of last year and this is up 31 per cent on the same figure from 12 months previously.
There was also an increase in the value of new lending for buy to let, rising from £4.3 billion in Q4 2012 to £6.6 billion 12 months later.
However, concern over interest rates resulted in more than 80 per cent of mortgages being taken out in Q4 2013 on a fixed-rate basis.
Bank of England governor Mark Carney has admitted rates could be as high as three per cent in the medium term, echoing the comments made by his colleague Charles Bean at the North East Chamber of Commerce President’s Club Talk.