Last year saw the highest number of first-time home buyers (FTBs) in the UK market since 2006, new research from trade association UK Finance revealed.
There were 365,000 first-time buyers looking for homes last year, an increase of 7.4 per cent from 2016.
But mortgage lending cooled, with only 30,800 new first-time buyer mortgages completed in December, 5.2 per cent fewer than the previous year.
Total new lending of £5.1bn during December was 1.9 per cent lower year-on-year.
Paul Smee, head of mortgages at UK Finance, said: "2017 saw the number of first-time buyers reach its highest level in a decade, which is welcome news for those getting started on the housing ladder.
"But although the market remains competitive, there is no room for complacency, with weaker December figures consistent with our market forecast of subdued growth this year.
"We are also seeing a less buoyant buy-to-let market, which continues to be impacted by recent tax and regulatory changes. This will continue to flatten gross lending volumes this year."
UK Finance’s data showed the average age of a FTB is 30, and they have an annual income of £41,000.
There was also a big drop in buy-to-let (BTL) mortgages, with just 5,300 completed in December, down 17.2 per cent on the previous year.
By value BTL accounted for just £800m, an 11.1 per cent year-on-year fall. About 9,900 BTL remortgages completed in December, and 11.6 per cent drop on the previous year.
Steve Seal, director of sales and distribution at Bluestone Mortgages, said many would-be borrowers were being turned away by mortgage providers.
He said: "It’s great to see first-time buyers increase year-on-year. However, there is still a larger group of people that are not being treated fairly when it comes to the mortgage application process.
"Successful business owners, entrepreneurs or contractors are being turned away by high-street lenders for not fitting traditional lending criteria. Yet it is this group of workers who are the backbone to our UK economy and need greater support from the wider industry.
"Many of our first-time buyers are from this pool of borrowers and until the mainstream industry learns to understand their situation on a case by case basis, specialist lenders will continue to support these borrowers and give them the chance of home ownership they deserve."