Activity in the mortgage market took a turn for the better during May, particularly for first-time buyers.
House purchase lending increased by 36% compared to April, whilst the number of home loans also increased by 33%.
According to latest figures from the Council of Mortgage Lenders (CML), a larger number of mortgages were issued to first-time buyers, from 12,700 in April to 18,100 in May, suggesting young people are returning to the housing market. This follows concerns over the slump in activity seen after the 1% stamp duty holiday ended in March.
Encouragingly, more young people appear to have extra money to spend on their first property. More first-time buyers are buying properties valued between £125,000 and £250,000, an increase from 37% in April to 44% in May. In 2007, prior to the financial crisis, this percentage was 50%.
CML director general Paul Smee commented: "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.
"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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