Stabilisation in house prices, combined with greater competition in mortgage lending, has given first-home buyers the incentive to get back into the property market. Mortgage aggregator AFG reported yesterday that sales to first-home buyers made up 11.7 per cent of the loans written by its brokers in August, an increase from 11.1 per cent in July and 9.5 per cent in June.Competition between lenders has been evident in the increasing number of them offering mortgages with loan to valuation ratios above 90 and 95 per cent. High LVRs are popular with first-home buyers, who often struggle with deposit requirements.Yesterday AMP Bank dropped its basic variable rate for new customers by 13 basis points to 6.54 per cent. AMP is also offering a three-year basic fixed rate loan at 6.99 per cent.The Reserve Bank noted, in a press release yesterday to announce its decision to leave the cash rate unchanged, that evidence had emerged of more willingness to lend. It also said that credit outstanding for housing had slowed a little over recent months and the upward pressure on dwelling prices appeared to have abated.AFG executive director Kevin Matthews said in a statement that government grants to first-home buyers had brought forward buying decisions in 2009. He said: "The impact of those grants seems to have washed through the system."A year ago first-home buyers accounted for 20.9 per cent of mortgage sales.The overall AFG figures show a reversal of the declining trend in May, June and July. AFG brokers wrote a total of 6269 loans in August, up from 5698 in July. The value of those loans was $2.3 billion, up from $2.1 billion in July. The average loan size was $373,750.The average loan to valuation ratio was 63 per cent, up a little from 62.4 per cent in July but consistent with the trend this year.Once again the attractive fixed rate deals in the market, with three-year rates close to variable rates, failed to attract borrowers. Fixed rate loans accounted for 3.9 per cent of the total in August, up slightly from 3.4 per cent in July.The most popular loan was the standard variable, which made up 60.8 per cent of the total, followed by basic variable (16.8 per cent), home equity (10.2 per cent), introductory rate loans (8.2 per cent) and fixed.