First-time buyers took out 23,600 loans in September, which is a 34% increase year-on-year, according to data from the Council of Mortgage Lenders.
Lending rose 16% quarter-on-quarter with lending showing transactions at their highest quarterly level since 2007.
However, the average income multiplier of 3.39 gross income may counter fears first-time buyers could be overstretching themselves.
Overall in the third quarter of 2013, 74,800 loans were advanced to first-time buyers, which had a value of £10.4bn. This was an increase of 16% from 64,500 loans in the second quarter of 2013 and an increase of 34% from 56,000 loans in the same period in 2012.
However, total home-owner house purchase lending fell 14% to £16.2bn in September, which the CML attributes to a seasonal dip, but this is up 41% against last year with gross lending of £49.3bn in Q3.
This represents a 17.6% increase on the second quarter of 2013 and a 32% increase on the third quarter of last year.
Remortgaging figures also grew strongly in September, up 20% from August and 11% in Q3 against the previous year.
On buy to let, the total advanced increased slightly to 14,600 loans in September, up 0.7% against August. Buy-to-let overall in quarter three of 2013 grew compared to the second quarter and the same period last year.
Despite this, the continued downward drift in mortgage interest rates have kept borrowers’ payment burden low. First-time buyers spent 19.2% of gross income to cover capital and interest payments, slightly above the 19.1% lowest figure since 2005.
Paul Smee, director general of the CML, said: “First-time buyers were a key driver in the first half of 2013 but now home movers and remortgages are showing renewed strength which puts the market in a good position to continue momentum into the final few months of 2013 and the new year.”
Jeremy Duncombe, director, Legal & General Mortgage Club, said: “According to our own data borrowers are already starting to consider the affordability of their mortgage in the medium term. So far, 2013 has seen a revival in fixed rate products. 86% of all house purchases and remortgages in August were taken out with a fixed rate mortgage deal. This is compared to 67% for August 2012 and 77% at the peak of the housing boom in August 2007.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Early data regarding the Help to Buy scheme suggest that first-time buyers are also primarily benefiting with more than 80% of the Halifax’s applicants so far being first-time buyers, for example. We expect the scheme to significantly boost the number of first-time buyers in coming months.”
He added: “While all this is encouraging, it needs to be put into context. Transaction levels are still well off their pre-crisis peak although the market is moving in the right direction.”
Lucy Hodge, director of Vantage Finance said: “Today’s figures certainly reflect what we have been seeing in the market. Demand for BTL products is growing, thanks to a buoyant rental market that shows no signs of slowing.
“It’s a long time since there have been enough BTL products to satisfy the needs of property investors, and at the moment any new products are snapped up really quickly.
“Funding solutions beyond the high street are proving particularly popular. As a result of restricted criteria and fairly restrictive maximum exposure limits from mainstream lenders on the number of loans, or volume of lending to an individual, many have sought out more comprehensive solutions from commercial lenders, or those more geared toward professional landlords where there is scope for larger portfolios.”