Mortgage providers have become “significantly” more willing to lend to people with deposits of less than 10% this year as the Government’s flagship Help to Buy scheme continues to have an impact, a Bank of England report has found.

The Bank’s credit conditions survey for the first quarter of 2014 found the willingness to lend at loan-to-value (LTV) ratios above 90% is the highest reported since the question first started to be regularly asked of lenders last spring.

Many lenders attributed this increased availability of low-deposit mortgages to their participation in Help to Buy, the report said.

The UK-wide Help to Buy mortgage guarantee scheme was fully fired into action last October to offer state-backed mortgages to credit-worthy people with deposits as low as 5%. Lenders representing around two-thirds of the mortgage market have come on board the scheme.

The survey asks banks and building societies about credit conditions over the past three months and their expectations for the coming quarter to help maintain financial stability.

Lenders said they expect demand for mortgages from home buyers to see a significant lift in the next three months. They also told the survey they expect rising house prices to encourage more people to re-mortgage.

Mortgage borrowers have been taking advantage of ultra-cheap deals in the low interest rate environment as housing market activity has lifted, and lenders told the survey they expect to narrow their profit margins slightly in the coming months. But some lenders indicated that the scope for further falls could be limited.