First-time buyers drive mortgage approvals to best start of year since 2008 The scheme, which launched last August, was set up by the Bank of England to help the economy by using taxpayer subsidies to reduce banks" funding costs, which were then supposed to be passed on to borrowers. "Despite early doubts about the effectiveness of the Funding for Lending Scheme, it's now the main reason why lenders are offering more competitively priced products, and most crucially at the first time buyer end of the market," he said. Without the first time buyer, the market cannot improve. It's vital that funds from the Funding for Lending Scheme don't dry up. If they do, lenders will once again head for the safe haven of higher deposit borrowers and we'll be back to square one. Mark Harris, chief executive of mortgage broker SPF Private Clients, said the numbers suggested that "the recovery is underway," with the FLS helping first-time buyers to the market. "They are still putting down a 20pc deposit, on average, and with the FLS making more deals available at 90pc loan-to-value, this should further increase the number of first-time buyers able to get on the housing ladder in coming months," he said. Figures out from the Bank of England earlier this month showed that Britain's banks and building societies drew £13.8bn from the state-backed scheme cheap credit scheme (FLS) in its first five months of operation, but cut loans to households and businesses by almost £2bn. The Bank's data from August to the end of December showed that just 13 lenders used the scheme, which was designed to help revive the economy by lowering borrowing costs and increasing the supply of credit for households and businesses. Economists described the figures as "disappointing" and Vince Cable, the Business Secretary, repeated his call for changes to the scheme, telling BBC Radio 4"s World at One that "it may need to be adapted." He will be meeting Paul Tucker, the Bank's deputy governor, "to discuss how we can improve it." The 13 lenders that tapped the FLS reduced their stock of UK loans by £1.88bn. Of those, 10 did increase lending but their efforts were more than offset by massive withdrawals by Royal Bank of Scotland, Lloyds Banking Group and Santander. Despite the strong start to the year, lending was down 16.6pc in January compared to December 2012, CML said. However, Howard Archer, economist at IHS Global Insight, noted that the data was not seasonally adjusted and mortgage advances traditionally dipped in January. "It is looking increasingly likely that that house prices could eke out a small gain over 2013 supported by modestly increased activity," he said. However, it remains hard to see house prices making a decisive move upward in 2013 given the still difficult and uncertain economic environment. Indeed, periodic slips in house prices remain highly possible. In another sign that activity could be about to push up again, the National Association of Estate Agents (NAEA) said at the start of the month that the number of househunters its members have recently seen has reached a five-year high.