FIRST-TIME buyers are borrowing a higher proportion of their property's value than ever before, with the average home loan to value (LTV) having increased to almost 85 per cent over the past year, according to Moneyextra website.

Although official statistics have shown a sharp fall in the number of first-time buyers in recent months, those who are brave enough to buy are producing ever-smaller deposits.

According to Moneyextra, the average first-time buyer had a deposit of almost 20 per cent a year ago, compared to around 15 per cent today.

But David Hollingworth, of London & Country mortgage broker, says that while higher LTVs leave buyers at a greater risk of falling into negative equity if the market crashes, the most important factor when buying a house remains the affordability of your mortgage.

"There's not been much movement in terms of the salary multiples which are being offered," he says. "They've remained fairly stable, and the most important factor is affordability. Yes, you're exposing yourself to a greater risk of negative equity if you go for a higher LTV, but if you can afford your mortgage payments, it shouldn't be a problem."

Meanwhile, Yorkshire Bank revealed the first signs of growing confidence among first-time buyers this week. A survey of 2,000 first-time buyers found that two in five believe the next interest-rate move is more likely to be down than up, and that now is the best time to get on the ladder in years. According to its poll, first-time buyers now account for more than 16 per cent of all purchases, compared to 10 per cent last summer.

Gary Lumby, the head of retail at Yorkshire Bank, says: "Unfortunately, a downside to this new-found confidence gained from a slowing market has emerged. A worrying proportion of first-time buyers would be prepared to drop their offer at the very last minute of the house-buying process, leaving the seller in a quandary over whether to take the financial blow or to go through the hassle of putting the house back on the market.

"But it's good news that first-time buyers are beginning to rate more highly their chances of getting on the property ladder. This growing return of confidence is partly down to prices slowing, and the expectation that any further rise in interest rates will be only slight."