Mortgage lending approvals were up 23% in in the three months to July against the first quarter and 13% higher year-on-year.

As criteria has loosened, the value of residential loans advanced to first-time buyers has increased by £1.9bn over the past year to £8bn, up 31%.

The proportion of mortgage lending at over 90% rose from 2.1% in Q1 2013 to 2.5% in Q2 2013. Lenders are stretching income multiples too with 24.8% of lending now done at over 3 x income multiple for joint applicants.

The ratio of new lending at both a high LTV and high income multiple increased by 1.6% to the same level recorded in Q2 2009.

Net advances in Q2 2013, or gross mortgage lending minus UK mortgage repayments, amounted to £5.1bn, 8.6% more than Q2 2012.

Average mortgage rates are also at their lowest levels since records began, falling from 3.65% in Q1 2013 to 3.47% last quarter.

Lending for property purchase accounted for 65.0% of new advances – a rise of 1.6% over the quarter.

Buy-to-let lending has also jumped from £3.9bn in Q2 last year to £5bn in Q2 this year.

New reported arrears levels have fallen 12% year-on-year to 32,500, or 292,000 in total. New cases taken into possession totalled 7,795 in Q2 2013, a 10% reduction from Q2 2012.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Growing confidence in the housing market as prices rise, particularly in London and the south-east, is also stoking the market.

“More first-time buyers are returning to the market, with a small increase in those borrowing more than 90% LTV. With the Help to Buy scheme guaranteeing loans for buyers with modest deposits, we expect this trend to continue. While George Osborne has stated that high loan-to-value mortgages are not ‘exotic weapons of mass destruction’, borrowers must still ensure that they can afford a high LTV mortgage before taking the plunge.”