This is according to new data released today by the Council of Mortgage Lenders.
Lending to home movers also increased in November while remortgage lending was down against the previous month and the same period in 2011.
First-time buyers
The number of loans taken out by first-time buyers reached the largest monthly total since the end of 2009 (except for March when the end of the stamp duty holiday boosted activity).
A total of 21,700 loans were advanced to first-time buyers in October, worth £2.7 billion according to the CML, representing an 8% rise compared to October and up by 24% on November last year.
For the second consecutive month, loans to first-time buyers accounted for 41% of all house purchase loans. This is higher than the usual proportion of around 38%.
Indicators of loan affordability remained stable in November with the median loan-to-value ratio staying at 80% while the percentage of income consumed by initial interest and capital repayments was unchanged at 20.0%.
Home movers
A total of 31,100 loans worth £5 billion were advanced to home movers in November, representing a 5% increase compared to October and up by 6% on the same period in 2011.
Home movers typically borrowed 2.86 times their income in November, down from 2.90 in October, while the percentage of income consumed by initial interest and capital repayments ticked down to 19.1%.
As a result of the rise in loans to first-time buyers and home movers total house purchase lending increased in November.
A total of 52,700 loans were advanced in the penultimate month of the year, up by 13% compared to the same period in 2011, and up by 6% compared to October. By value, house purchase loans were worth £7.7 billion in November, a rise of 10% on November last year and 4% compared to October.
Remortgages
Remortgage lending fell in November, continuing to run below year-earlier levels. A total of £3.2 billion was advanced, down from £3.5 billion in October and 26% lower than the same period in 2011.
Commenting on the data, CML director general Paul Smee said: "Encouraging activity in the first-time buyer sector in November contributed to an uplift in house purchase lending suggesting that the underlying trend for year-on-year increases should continue.
"We expect the Funding for Lending scheme to continue to encourage a downward drift in interest rates. This may prompt an increase in remortgage activity as borrowers seek to take advantage of lower rates."
Ben Thompson, MD at Legal & General Mortgage Club, said: "In the latest data from the CML the rise in the first-time buyer numbers could prove to be quite significant.
“There always eventually comes a point in the cycle where some tenants see renting as a waste of money, preferring to buy their own home. This is usually seen when renting becomes more expensive on a monthly measure than buying.
“We have however been into unchartered territory in recent years; mortgage availability and confidence have both been very low, meaning it has been harder for tenants to become FTBs even if they wanted to. Things might, however, be turning.
“ Those wanting to become FTBs may well now have decided that prices have gone as low as they can - mortgage rates are pretty much the same - and have decided that now is the time to buy.
“Although we still have a regional and patchy overall picture, these may well be the first signs of a recovery in the housing market and as an industry we need to ensure that this recovery becomes permanent - when it does this should benefit the wider economy which in itself will introduce a further improved level of buyer confidence."
Ashley Brown, director of Moneysprite, agreed the numbers make good reading. "What began as mere mood music is turning into real momentum,” he said.
"The jump in loans to first-time buyers is the best indication yet that the Funding for Lending Scheme is starting to work - and that lenders are opening their coffers once again.
"95% LTV loans are not just available but more importantly they are affordable again as a genuine price war gets underway.
"The main thing holding back the market now is a lack of property for sale. With the housing market still weak in much of the country, sellers are holding back in hopes that things will improve.
"As the increased demand translates to higher house prices, it should translate into progress for both the property and mortgage markets. But after the lessons of the past decade any growth this time will be steady rather than stellar."
