Mortgage lending highest for five years: Amount loaned hits £16.6bn and is nearly 30% higher than this time last year House prices rising at almost three times average worker's wage Average cost of a UK home reaches £242,000 Rise comes amid warnings of a 'house price bubble' Mortgage lending in Britain has surged to its highest level since the banking crisis began five years ago amid warnings of "a house price bubble." The Council of Mortgage Lenders said gross mortgage lending last month hit £16.6billion, 29 per cent higher than the same month last year when it was only £12.9billion. The speed at which mortgage lending is picking up is extraordinary. In February, just £10.6billion was lent, rising to £14.7billion in May followed by £16.6billion in July. On the up: Mortgage lending hit £16.6billion last month, the highest level since the banking crisis five years ago It comes as official figures show house prices are also rising at a rate nearly three times faster than the average worker's wage. House prices are rising around 3.1 per cent over the last year, but average pay rises are just 1.1 per cent. The average cost of a home in the UK has jumped to £242,000, although this masks significant regional differences, according to the Department for Communities and Local Government. The average home costs £425,000 in London, but £145,000 in the North East, the cheapest English region. Mark Field, Tory MP for the Cities of London and Westminster, said: "The London market has never really been in the doldrums. The danger here is that affordability of property prices becomes ever more a fantasy for more and more people. As house prices rise, many losers are created such as first-time buyers who cannot afford to get onto the property ladder and families who cannot afford to buy a larger home. The Government insists it is helping young people with the recent launch of its Help to Buy scheme, allowing people to buy a new home for up to £600,000 with a deposit of only five per cent. The buyer receives a 20 per cent loan which charges no interest for the first five years. During the first four months of the scheme, around 10,000 reservations have been made. Another scheme, which confusingly is also called Help to Buy, will launch in January, allowing people to buy any type of home, both old and new, also with a five per cent deposit. Boom: The average cost of a home in the UK has jumped to £242,000, although this masks significant regional differences For this scheme, the Government will provide a guarantee to the mortgage lender on 15 per cent of the property price to the mortgage lender. A separate Government scheme, Funding for Lending, allows banks to borrow cheap money if they maintain or increase lending to households or firms. Mark Harris, chief executive of the mortgage broker SPF Private Clients, said: "Help to Buy, Funding for Lending and most recently, the Bank of England's Forward Guidance, are all contributing to boost confidence in the market. However, with returns on cash poor, buy-to-let investors returning to the market in droves and Government schemes to assist homebuyers, there is potentially the risk of a house price bubble. Borrowers must not get carried away, buy sensibly and take care not to overstretch themselves, whether they are planning to live in the property or rent it out. The Bank's "Forward Guidance" means it will not increase the base rate from 0.5 per cent until the unemployment rate falls to seven per cent, subject to certain conditions. It is currently 7.8 per cent. Around 10,260 mortgage deals were on the market in July, compared to just 3,442 in July 2009, a sign of how the market has recovered, according to research by the Mortgage Advice Bureau. A typical homebuyer is currently taking out a loan for £159,391, and earns a salary of just under £41,000. By comparison, the average full-time salary is £26,500. Caroline Purdey, an analyst at the Council of Mortgage Lender, said: "An improvement in sentiment and activity continues to show in the UK housing and mortgage markets, with a more positive picture also starting to emerge in the economy.