Mortgage rates are starting to reach a point agreeable with first time buyers according to Moneyfacts.co.uk. This relaxing slightly of the market has also prompted an overall increase in activity.

The online comparison site moneyfacts.co.uk detailed the current average two year fixed first time buyer rate is 5 per cent down from 6.48 per cent six months ago to 6.15 per cent. This percentage is offset with a 10 per cent down payment. At 25 per cent down payment, the rate offered is 4.11 percentage, down from 4.37 per cent six months ago. June saw a 20 per cent increase in approvals from May, as reported by the Council of Mortgage Loans.

Louise Holmes, spokesperson for Moneyfacts.co.uk, said: "Potential borrowers dreaming of owning their first home will have been pleased with recent reports suggesting a fall in house prices.

"Mortgage lenders, however, see house prices continuingly falling as a threat and usually review their credit criteria by increasing deposit requirements.

"First-time buyer mortgage rates have fallen over the past six months and it is understandable that they are using this as a window of opportunity.

"The fact remains that lenders will always offer a better rate to borrowers with a bigger deposit. First-time buyers currently have to raise an average deposit of £44,030 for their first home. At this level, borrowers must surely be finding themselves reliant on the so-called ‘Bank of Mum and Dad’ to assist with raising funds."

David Dooks, British Bankers Association statistics director, said: "The banks’ mortgage lending position was little changed in June. The abolition of HIPs and a reported increase in the number of house sellers is expected to encourage activity in the market, though this may be tempered by households’ uncertainty over job prospects and the impacts of fiscal tightening."