Mortgage lending is on the rise – but borrowers still require hefty deposits, which experts warn could cause any recovery in the housing market to wane.

First-time buyers still have to fork out an average deposit of 25 per cent of the purchase price, according to figures released this week by the Council of Mortgage Lenders (CML), while homemovers need to put down an average deposit of 34 per cent.

The number of home purchase loans made in August was nearly a third higher than the same period a year ago.

“House purchase activity has revived from its moribund state at the beginning of the year,” said Paul Samter, an economist at the CML. “It will be a drawn-out recovery process with seasonal ups and downs, but house purchase activity is now on a firmer footing.”

But remortgaging continued to decline because of restrictive lending criteria for the best new deals and the low standard variable rates. Remortgage loans in August were down 57 per cent from the same time last year. The CML said that new lending remained “cautious”, with more than three quarters of loans taken out at fixed rates and on a full repayment basis.

Average income multiples are also still lower than a year ago. First-time buyers borrowed an average of 3.03 times their income, down from 3.21 times a year ago.

But there were calls for mortgage lenders to relax their loan-to-value limits. “There’s a danger this recovery could fizzle out if lenders maintain such strict lending criteria,” said Michael O’Flynn, director of Findaproperty.com, the property search website.