Home-owners borrowed £9.4bn for house purchase in May, up 15 per cent month-on-month and 8 per cent year-on-year.
The Council of Mortgage Lenders latest figures showed this equated to 53,800 loans, up 13 per cent on April and 5 per cent on May 2015.
First-time buyers borrowed £4.3bn, up 10 per cent on April and 23 per cent on May last year.
This meant 27,500 loans, up 9 per cent month-on-month and 16 per cent year-on-year.
Home movers borrowed £5.1bn, up 19 per cent on April but down 2 per cent compared to a year ago, representing 26,300 loans - up 18 per cent month-on-month - but down 5 per cent on May 2015.
Remortgage activity totalled £5.2bn, down 15 per cent on April but up 30 per cent compared to a year ago.
This came to 30,900 loans, down 12 per cent month-on-month, but up 25 per cent compared to a year ago.
Number of loans for house purchase and remortgage
| House purchase | Remortgage | |||
| FTBs | Movers | Buy-to-let | Home owners | Buy-to-let |
May 2015 | 23,700 | 27,600 | 8,900 | 24,800 | 8,900 |
April 2016 | 25,200 | 22,300 | 4,200 | 35,100 | 11,700 |
May 2016 | 27,500 | 26,300 | 4,400 | 30,900 | 11,900 |
1 month change | +9.1% | +17.9% | +4.8% | -12.0% | +1.7% |
12 month change | +16.0% | -4.7% | -50.6% | +24.6% | +33.7% |
Paul Smee, director general of the CML, said there was a sense of the market regaining some equilibrium in May, following the stamp duty driven spike in March and the subsequent dip in April.
“For the second month running, first-time buyers borrowed more than home movers, the first time in 20 years that this has been the case.
“Brexit, and its likely effect on the market, is a question to which the answer will not immediately be forthcoming. Lenders will continue to be open for business as usual, but lending volumes may be affected by uncertain consumer sentiment.”
Buy-to-let house purchase lending was under half what it was in the months leading up to the stamp duty changes, whereas buy-to-let remortgage is by value 10 per cent less than levels seen in January and February, before the surge in activity in March.
Affordability metrics for first-time buyers have remained relatively stable, with the typical loan size increasing to £131,000 from £130,000 in April, while the household income of borrowers also increasing slightly from £39,700 in April to £40,000 in May.
Home movers showed a similar trend, with the average amount borrowed increasing to £166,000 from £163,000 in April, and the average household income of a home mover also increasing to £53,300 from £52,500.
Jonathan Harris, director of mortgage broker Anderson Harris, pointed out swap rates dropped considerably since the European Union referendum, although they have recovered slightly on the back of Theresa May’s appointment as prime minister.
He said: “Lenders have been reducing mortgage rates accordingly and there is speculation that interest rates will be reduced either tomorrow or next month. There are rock-bottom fixes now available, which should help boost activity in the market over coming months.”
