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On a quarterly basis, lending to first time buyers and those looking to remortgage also increased, while lending to home movers eased.

In the fourth quarter of 2012, some 5,200 first time buyers bought their first home in Scotland, a 4% increase compared to the third quarter and up by 18% on the same period in 2011. It was also the largest quarterly total for loans to first-time buyers since the last quarter of 2009.

By value, loans to first time buyers totalled £490 million in the fourth quarter, up from £460 million in the previous quarter and £400 million in the fourth quarter of 2011.

The CML said that indicators of affordability for first time buyers in the Scottish market were also encouraging. Lower house prices, on average, meant that more first time buyers were exempt from paying stamp duty than in the UK. In the fourth quarter 62% of first time buyers bought a property for less than £125,000 compared to 39% in the UK.

First time buyers also borrowed less relative to their income than in the UK, and spent a smaller proportion of their income on mortgage payments.
 
First time buyers in Scotland typically borrowed 2.88 times their income, considerably lower than the 3.26 times borrowed by their counterparts in the UK, and spent 18% of borrowers' income, compared to 20% in the UK.

The CML said that while it may appear as if the recovery in first time buyer volumes in Scotland has lagged behind the UK where first time buyer lending is at its highest since 2007, in reality this is due to the initial resilience in the Scottish market at the onset of the financial crisis.

Lending did not fall as quickly as the rest of the country in 2008 and so it had to increase further to get above 2008 levels.

Meanwhile, the annual Second Steppers report from the Bank of Scotland indicates that little has improved in the past year for those first time sellers in Scotland looking to take the second step on the housing ladder.

Some 61% wanted to move up the housing ladder in 2012 but were unable to do so as they face an increasing number of challenges. Additionally, 18% of respondents believe it is actually harder to move up the ladder than it was to get on it in the first place, whilst 47% of second steppers believe it is equally difficult to move up the ladder, than it was taking the first step onto it.

Second steppers in Scotland are currently looking to stay longer in the first home, a sign that market conditions are changing their expectations. In 2011, they expected to spend four years in their first home, whereas now they are more likely to plan to stay for five and a half years. On average, second steppers have already had their home on the market for thirteen months, whilst 9% have also previously marketed their property.

Over half, 53%, are looking to move as their current property is too small for their needs, some 26% are expecting to start a family and need more room, 38% plan to move to a new area, whilst 14% are relocating for work.

The report shows that raising a deposit remains a key barrier. Some 66% of second steppers in Scotland believe that the level of deposit required is the main challenge for them being able to arrange a mortgage, and as a result is a key reason they have not been able to move up the housing ladder so far. In particular, 6% say they don't have any money saved to put towards a deposit and 12% don't have enough of a deposit saved at present.

Almost half of second steppers have lost some (36%) or all (11%) of the deposit they paid on their first property, due to declining house prices since they purchased their first home. The average house price paid by a first time buyer has reduced by £28,345 since the typical second stepper in 2012 bought their first home in 2007. The average deposit for a typical second stepper in Scotland in 2012 was £37,057, four times more than the average deposit required in 2002 which was 9,053.

Meanwhile, the research indicates that Scottish second steppers have on average just over £33,000 of equity in their current property, with 34% having less than £20,000, leaving a considerable equity shortfall. Some 60% expected to have more equity in their property by now.

Second steppers in Scotland are doing what they can to make the move up the ladder as soon as possible, with 66% saying they are saving to fund the move. Within this, 36% continued to save after buying their first home, whilst 20% have started saving again specifically to fund their move. Separately, 34% are overpaying on their mortgage. Savings are set to play a key part in funding the deposit needed to move with 65% expecting to use savings to help raise the deposit for their next home.

'Despite recent improvements in the housing market, first time sellers in Scotland continue to be faced with some very real and tough challenges when trying to make their next move on the property ladder. It is vital that this group of home movers receive more support and attention as they play an intrinsic role in getting the housing market moving again,' said Laurence Mann, head of mortgages at the Bank of Scotland.

'To achieve a sustainable housing market in Scotland we need to see movement throughout the market. If second steppers get stuck on the first rung, movement at the bottom half of the ladder comes to a standstill, and this bottleneck will not only restrict the supply of starter properties but will have a knock on effect across the whole of the housing market,' he added.

However there are signs of improvement. The research found that 41% of all respondents believe the mortgage market has improved over the past year, with 13% specifically pointing to better mortgage deals on the market for second steppers, and 19% believing more mortgages are available. As a result, over a third, 36%, believe this will help them make the move in the future.

But the majority of first time sellers agree that more help is needed. Some 24% think the new government schemes, for example MI New Home and Funding for Lending, will have an impact on them and help them to move up the property ladder, yet over half, 52%, do not feel they will have an impact on this group of home movers. As a result, 67% want more support from the government and 83% would like their mortgage lender to do more.