Number of mortgage loans offered ‘rebounded’ in May after facing a drop when stamp duty for first-time buyers was reintroduced, according to the Council of Mortgage Lenders (CML).
48,300 mortgages were lent to for the month of May - a rise of 33% from April and 24% on the previous year.
The value of loans offered to first-time buyers in May also rose significantly from April - from 1.5 billion to 2.3 billion. This was due to new buyers seeking an average of £104,400 in May compared to £97,750 in April.
CML described the rise as the ‘rebound’ effect after mortgage lending slumped when the ‘stamp duty holiday’ was terminated at the end of March. Increases on previous year The number of completed house sales between January and May of this year was 11% than those of last year, as revealed by figures from the HM Revenues and Customs (HMRC).
Paul Smee, Director of CML said:
“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.”
Mark Harris of SPL mortgage brokers also commented:
“The housing market looks to be in better health than previously thought.The number of new mortgages taken out is greater than this time last year, although still some way off the volume of deals done at the height of the market.”
The path ahead
Although the CML data showed positivity for homebuyers, concerns have been raised regarding the future of mortgage lending.
Howard Archer of IHS Global Insight remarked:
“While the CML data show a welcome pick up in housing activity compared to April, it is still very low compared to long-term norms”
“We seriously doubt that there will be any significant pick up in housing market activity in the near term at least given the weak economic fundamentals, uncertain outlook and low consumer confidence.”
The problems facing the Eurozone may also have an unsettling effect on the future of homebuying. Paul Smee warned:
“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.”