Lenders are also struggling to meet half-year lending targets after a slow start to the year, although criteria still remains tight for those borrowing under £125,000.

Low-income buyers applying for the higher LTV products continue to struggle with tight criteria reflected by subdued activity at the bottom of the market. Fewer first time buyers got onto the ladder in June as approvals for homes under £125,000 – typical first time buyer property – accounted for only 22% of total approvals in June, down from 23% in May, and the lowest level since November 2010. This contrasts to early 2008 when purchases of the cheapest property accounted for 30% of all approvals, largely by wealthier buyers.

Richard Sexton, business development director of e.surv said: “There has been a great deal of recent chatter about 95% LTV products hitting the market, but if you delve beyond the headline loan-to-value ratio it is clear criteria remain too restrictive for the majority of lower income buyers.”

With average rents now at £696, according to LSL, buying is undoubtedly the cheaper long term option, so there is greater incentive to buy than ever before, said e-surv.

The South saw a greater increase in purchase approvals than the North, with house purchase approvals in London up 12.3% in June, and 6.9% in the South-East. In contrast, in Scotland purchase approvals fell 1.4%, while activity was also relatively subdued in Cumbria and the North-East, with increases of just 2.8%.

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Overall first time buyer numbers in London remain relatively low, reflected by the average LTV, which is well below the national average at 56.1% and lower than any region in England and Wales, reflecting the larger pool of wealthier buyers. At the height of the boom in May 2007, LTV s in London were 68.5% and higher than the national average.

“Lenders still have to deal with significant risks to their balance sheets so, after a concerted effort to meet lending targets for the first half of the year, the next few months could see a return to a lower level of activity as they ration funds cautiously in the third quarter,” said Sexton.