Major Banks are dominating the mortgage market and are keeping deposits at a level out of the reach of first-time buyers, an industry organisation has said.

The Association of Mortgage Intermediaries (AMI) believes that loan-to-value rates are at an artificially high level.

With recent reports of a upturn in the economy and the mortgage market, there are a sufficient number of deals available to those looking to buy a house, but first-time buyers are being held back, the group warned.

Robert Sinclair, director of AMI, said: “The housing market recovery seems to be holding, but it is unlikely that we will ever return to pre-recession levels of lending.

The limited demand for remortgages has left sufficient funds for those who want or need to move home.

However, first-time buyers are still limited by the size of deposits required. Lenders are now pricing new loans against the cost of retail funding not Base Rate or LIBOR.”

Sinclair added: “The stability in prices we have seen in the last few months may have much to do with the limited supply of quality property coming on to the market.”

A study by Santander subsidiary Abbey recently found that it is currently cheaper to take out a mortgage than to continue renting a home in every region outside of London.