Mortgage lending on the increase
Mortgage lending has shown a "healthy improvement" following a slump caused by the ending of a stamp duty concession for first-time buyers, lenders said.
There were 48,300 loans advanced for house purchase in May worth £7.2 billion, a jump of one-third month-on-month, and a quarter higher than the same month last year, the Council of Mortgage Lenders (CML) said.
First-time buyer activity also bounced back, following the "volatility" in March and April, after a two-year concession for this sector of the market ended, the CML said. Some 18,100 loans worth £2.3 billion were advanced to first-time buyers, an increase of 43% in the number of loans compared with April and a large 53% increase in terms of their value.
First-time buyer loans have also increased by more than a fifth compared with May 2011, the figures showed.
CML director-general Paul Smee said: "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.
"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."
The report comes after the British Bankers' Association (BBA) said that mortgage repayments outstripped lending for the first time in May as households focused on paying down their debts.
Net mortgage lending declined by £73 million, the first reversal in the 16 years that records have been compiled by the BBA. The number of mortgage approvals for house purchase also slumped to its lowest level in 13 months, according to the BBA's figures.
The CML said that its figures are for advances, which happen a couple of months after approvals, meaning the BBA's report could be a sign of what is to come. Its own figures do not cover net lending.
A CML spokeswoman said that while its report suggested the situation was returning to relatively normal levels after the "blip" seen in spring, it did not expect the situation going ahead to be easy. Lenders are expected to tighten their borrowing criteria further this year amid the weak economy and several have recently raised their rates for both existing and new borrowers.