By Daniel Hunter
The slump in activity that followed the end of the first-time buyer stamp duty holiday appears to have been short-lived as house purchase lending increased substantially in May, according to new statistics released today by the Council of Mortgage Lenders (CML).
In May, house purchase lending increased by 36% compared to April and 29% compared to last May. The number of loans also increased, by 33% from April and by 24% from a year ago.
Remortgage lending also increased in May with £3.5 billion advanced for remortgage. This was up from £3.1 billion in April but down from £3.8 billion 12 months ago when there was a greater expectation of interest rate rises.
First-time buyer activity bounced back following the volatility of March and April. 18,100 loans, worth £2.3 billion, were advanced to first-time buyers in May, up from 12,700, worth £1.5 billion, in April. This may be a 43% rise (53% by value) from April but, following the distorting effects of the end of the stamp duty concession, this returns first-time buyer lending back to a similar level seen in the second half of 2011.
"It is positive news for the market that the slump following the end of the stamp duty concession seems to have been short-lived. Lending is similar to late 2011 levels and showing a healthy improvement on the same time last year," CML director general Paul Smee commented.
"However, the problems in the Eurozone have not gone away. Economic uncertainty could affect both the supply of mortgage lending and consumer confidence and we still anticipate a challenging lending environment for the rest of the year."
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