Fears are growing that the property market is heading for a new bubble following news that 41% more first-time buyers took out a home loan in July 2013 compared to July 2012.
The Council of Mortgage Lenders said the 25,300 loans advanced to first-time buyers was also 5.4% up on the previous month of June.
The total number of loans advanced for home purchases also grew, rising to 57,400 – 9% on June 2013 and 21% on July last year; while buy-to-let loans also rose, to 15,200 in July 2013, up 12% on the previous month.
"Housing market activity is now clearly trending up, supported by strengthening consumer confidence and elevated employment, and fuelled by the Funding for Lending Scheme and the Help to Buy initiative," said Howard Archer, chief economist at HIS Global Insight.
"We are currently some way off any new housing bubble developing with activity still relatively limited compared to pre-crisis levels. Nevertheless, with housing market activity currently gaining appreciable momentum and new stimulus measures due to kick in at the start of 2014 (the "Help to Buy" mortgage guarantee scheme), it is something that policymakers need to keep a very close eye on.
"While an improving housing market is helpful to growth prospects, it is vitally important for stability and longer-term growth prospects that a new housing price bubble does not emerge."
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Archer believes that if the housing market continues to rapidly pick up over the coming months, the case for limiting or even eventually pulling the plug on the "Help to Buy" mortgage guarantee scheme that start in January 2014 will "look ever more compelling".
Meanwhile, the Bank of England has indicated that it will keep a close eye out for any house price bubble developing. As well as interest rate rises, it can also use other methods to try and cool an over-heating market, such as raising capital requirements on banks, making them scale back their mortgage offerings.