The Index shows that the average house purchase deposit fell by 2% between February and March to £61,325: the lowest figure recorded in the last twelve months.
While average purchase prices in March were up 7% year-on-year, the return of high LTV mortgages has helped to ensure that average deposits have grown at less than half of this rate over the same period (3%).
As a result, the average purchase mortgage LTV rose from 70.7% twelve months ago to 71.8%: the highest recorded since the Index began tracking this data in March 2009.
It meant the average homebuyer in March put up less of a deposit relative to the value of their purchase than at any point in the last five years.
Using data from more than 550 brokers and 900 estate agents, the Index shows the volume of mortgage applications from homebuyers grew by 4% between February and March.
This compares with a 28% rise between January and February and 19% between February and March last year.
With the year-on-year rise in purchase applications also slowing from 62% in February 2014 to 51% in March, it suggests a slight cooling of the market’s growth ahead of changes to mortgage regulations later this month resulting from the Mortgage Market Review (MMR).
With MMR implementation approaching on 26 April, mortgage product numbers rose to their highest point of 2014 during March with a monthly increase of 1.7%, taking the total to 11,126.
The broker channel drove this trend with intermediary product numbers up by 3.7% from February to 7,569. In contrast, the number of direct-only products available fell by 2.4% to 3,557.
Brian Murphy, head of lending at Mortgage Advice Bureau, said: “The option to take out a high LTV mortgage has been relied on by generations of first time buyers to get on the housing ladder.
“In a climate of strengthening house prices, buyers can take heart that deposit requirements are visibly easing thanks to the return of high LTV loans.
“Providing consumers can satisfy the new mortgage affordability checks, this trend should continue to boost access to the property ladder and ease the financial strain of buying a home.
“Lenders are gradually phasing in the changes required by the MMR and are clearly putting an emphasis on brokers when it comes to product distribution.
"The importance of understanding consumers’ finances and lenders’ requirements will make seeing your broker an even more important step to getting a mortgage under the new regime.”