Data from the Council of Mortgage Lending show first time buyers are driving the market with lending up 25% to £5.5 billion over a year.

The Council of Mortgage Lending (CML) report first time buyers continue to outperform home movers for the third month running with lending increasing 25.0% year-on-year to June.

Over one month the increase was 27.9% rising by £1.2 billion to £5.5 billion with a rise in numbers of 6,700 to 33,400 new first time buyers.

For the second quarter of 2016 first time buyers have shown strong growth up 23.4% with £13.7 billion of loans advanced compared to £11.1 billion for the previous quarter.

In terms of numbers, quarter two had 87,100 buyers compared to quarter one with 70,800 as lenders reduce mortgage rates making buying a home more attractive.

Buy-to-let landlord activity remains lower than before the stamp duty changes at the beginning of April.

Borrowing up with lower mortgage costs

First time buyers are finding the lower cost of borrowing more affordable with loan sizes increasing from £131,400 in May to £135,400 in June a rise of £4,000.

Borrowing costs have been reducing in 2016 as data showed a slowdown in economic activity sending swap rates lower.

Swap rates are wholesale money banks use to borrow and re-package as mortgages at lower costs as rates fall making it cheaper for homeowners.

Mortgage affordability has remained relatively stable with income multiples rising slightly from 3.51 to 3.55 while household income is only slightly higher rising from £40,000 in May to £40,377.

There were similar trends for home movers with borrowing increasing from £166,000 in May to £171,000 in June and income multiples rising slightly from 3.25 to 3.26 with a large rise in income from £53,300 to £54,700.

Paul Smee, director general of the CML said more loans were advanced to first time buyers in June than at anytime since August 2007.

It will take time and patience to understand how the market will evolve in the current environment says Mr Smee and he believe that the mortgage market is well capitalised for future business.

Help with the deposit for a new home can come from family members as the equity release buyer can access cash using a lifetime mortgage and give to a child or grandchild.

London first time buyers higher

There was a 9.6% rise in the value of loans to first time buyers for the second quarter 2016 compared to this time last year.

Although the value increased to £2.98 billion, the number of buyers reduced slightly from 10,900 for the second quarter last year to 10,800 this year.

There were increases in borrowing for first time buyers in London from £249,700 in May to £258,400 in June and income multiples rising slightly from 3.93 to 3.98 with a large rise in income from £62,900 to £64,500.

For London remortgage buyers were very active taking advantage of the cheaper rates with a 28.7% increase in the value of loans worth £4.26 billion and the highest value of remortgage lending in London since the last quarter of 2008.

In contrast home movers were 14.3% lower falling from £4.18 billion by value for the second quarter last year to £2.48 billion this year and the average loan advance actually decreased from £339,500 to £324,000.

Mr Smee said the second quarter data pre-dates the EU referendum and while it will take time to see how Brexit may affect the market, the London mortgage market clearly remains active.

What are your next steps?

Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.

Start with a free mortgage quote or call us and we can take your details. Learn more by using the property value tracker chart, mortgage monthly costs calculator and equity release calculator.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property for home improvements, holidays or even give to a family member.

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