Lending levels stayed stable in May but were down compared with a year ago, according to the latest market statistics from the Council of Mortgage Lenders.
Gross lending in May was £15.9bn, up marginally from £15.8bn in April, but down from £16.8bn in May last year.
Remortgage activity fell 10 per cent in both amount borrowed and volume of loans in May, compared to April. It also dipped in comparison to May last year, continuing the relatively subdued home-owner remortgage activity levels seen since around 2009.
First-time buyers (£3.4bn in May) saw a 13 per cent decline in lending volumes compared with last year, but were up 3 per cent on the previous month.
Home mover lending (£5bn) saw a similar trend, with volumes up 2 per cent on April but down 12 per cent year-on-year.
Home-owner remortgage activity (£3.7bn) declined 10 per cent compared with the previous month and 3 per cent compared with the same period last year.
Buy-to-let continues to grow year-on-year - although it was flat month-on-month - with remortgaging up 36 per cent and house purchase up 20 per cent.
Paul Smee, director general of the CML, said the figures suggested the market might be waking up after a subdued first quarter. “Activity has broadly been down on last year, but we expect it to rise in the summer months as, with historically low interest rates and a competitive lending environment, borrowing conditions are relatively favourable.
“But we cannot ignore the continuing affordability constraints caused by high house prices relative to earnings which will work in a contrary direction.“
Mark Harris, chief executive of mortgage broker SPF Private Clients, expressed surprise that remortgaging was down month on month and on the same period last year, given the rates currently available.
“This may be down to homeowners struggling to qualify for new mortgages as a result of tougher affordability criteria brought in under the Mortgage Market Review. There may also be some homeowners waiting for mortgage rates to fall further still, but while pricing may edge lower here and there as lenders compete for a limited number of borrowers, we have probably seen the low point for fixed rates.”
He added that it remains to be seen whether recent changes to claiming mortgage interest relief and the wear and tear allowance will have a negative impact on the sector.
peter.walker@ft.com
