Lending for house buying is still down compared to this time last year but there are signs that the market is at last awakening in time for a modest summer bounce, according to the Council of Mortgage Lenders.
It says home owners took out 49,000 loans in May, the highest number since December. That compares with 48,300 loans taken out in April.
“House purchase lending in May was slightly up on the previous month, suggesting 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” says Paul Smee, director general of the CML.
“But we cannot ignore the continuing affordability constraints caused by high house prices relative to earnings which will work in a contrary direction” he adds.
First-time buyers saw a decline in lending volumes compared to last year, but up slightly on the previous month. Home mover lending saw a similar trend with volumes up slightly on April but down year-on-year.
Home-owner remortgage activity declined compared to the previous month and compared to the same period last year.
Buy-to-let continues to grow year-on-year, mainly driven by remortgage activity, but also saw a slight month-on-month increase due to higher buy-to-let house purchase lending activity.