But lending to other sectors of the market has fallen, with loans to buy-to-let landlords tumbling by 20% year-on-year.

Lending to first-time buyers is the only area of the mortgage market that is thriving.

A total of £5.1bn was advanced to people purchasing their first property in March - that's  2%  more than in the same month last year, according to UK Finance.

But lending to other sectors of the market has fallen, with loans to buy-to-let landlords buying property diving by 20% year-on-year.

There was also:

  • 9.7% drop in the value of loans for people remortgaging
  • 4.7% slide in money lent to homemovers

Mike Scott, chief property analyst at Yopa, said: “First-time buyers are keeping the housing market going. First-time buyers have doubtless been helped by a very sharp fall in the number of buy-to-let mortgages.”

Above: two-bedroom flat for sale on Garratt Lane in London, SW17

Why is this happening?

The buy-to-let mortgage market has been subdued for some time following the introduction of a 3% stamp duty surcharge for people buying a second home and a number of tax changes that have dented landlords’ margins.

The situation has created an opportunity for first-time buyers, who previously had to compete against investors for homes at the bottom of the ladder.

The decline in people remortgaging is likely to be a lull following a busy start to the year, when homeowners sought to lock into competitive fixed rate deals ahead of predicted interest rate rises.

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Who does it affect?

While first-time buyers are benefiting from the lack of demand from investors, the subdued level of mortgage lending is not such good news for the housing market as a whole.

It points to a lack of demand from potential buyers, which is in turn likely to discourage sellers from putting their homes on the market.

The fall in landlords expanding their portfolios could mean renters have less choice and face higher rents going forward due to the lack of supply.

What’s the background?

Separate research from the National Landlords Association suggested landlords were not only holding off expanding their portfolios, but were actively reducing them.

It found that one in five landlords, equivalent to 380,000 investors, plans to sell a property in the coming year.

Just under half of these will be selling a flat, while 33% will be offloading a terraced house.

Both types of property are likely to be particularly appealing to first-time buyers.

In further good news for those hoping to buy their first home, only 7% of landlords plan to sell their property to another buy-to-let investor.

Top 3 takeaways

  • Lending to first-time buyers was the only area of the mortgage market to increase
  • A total of £5.1bn was advanced to people purchasing their first property
  • Lending to other sectors of the market decreased, with advances to buy-to-let landlords buying a property diving by 20% year-on-year

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