First-time buyer boost in May
Mortgage lending rose in May, according to UK Finance, with the residential mortgage market apparently firing on all cylinders.
First-time buyers borrowed £4.7bn, up 12% both on last month and on May 2016. They took out 29,200 loans, up 13% month-on-month and 8% year-on-year.
Home movers were also out in force, borrowing £6.2bn, up 11% on April and 22% year-on-year. This equated to 29,200 loans, up 11% month-on-month and 13% compared to a year ago.
And remortgaging activity was strong too, according to the figures – up 10% by value and 9% by volume on April. Compared to a year ago, remortgage lending was up 12% by value and 7% by volume.
The true picture
However, the double digit increases and rises across the board may not tell the whole story, as Paul Smee, head of mortgages at UK Finance, explained: “The apparent strong growth in mortgage lending in May might flatter to deceive. The relative weakness in lending last May following the Stamp Duty changes makes comparisons misleading.
“The seasonally adjusted data shows a less buoyant lending picture, with home buying activity remaining relatively unchanged month-on-month and remortgage lending gradually decreasing each month since January.”
In other words, when you take out the fact that the Stamp Duty deadline skewed the market massively in April and May 2016, the true picture is less flattering.
On a seasonally adjusted basis, lending to first-time buyers and home movers declined by value and volume in May compared to April, said UK Finance, but increased compared to a year ago.