Lending to first-time buyers was £5bn, slightly lower than April which saw £5.2bn of loans advanced. The year-on-year comparison shows lending has risen from £4.6bn in May 2016. Homemovers borrowed £6.3bn, down from £7bn in April but up from £5.5bn in May 2016.
The strength of May’s year-on-year lending figures should be viewed with caution, said Paul Smee, head of mortgages at the newly-formed UK Finance. May 2016 produced low levels of lending given the stampede to buy properties in March before the 3% Stamp Duty levy was introduced, making the purchase of second homes more expensive.
Residential remortgaging also dropped month on month as May saw a fall from £6.1bn to £5.9bn, however, there was a year on year rise of 7%.
Buy-to-let lending and remortgaging remained flat. May’s advances to buy-to-let purchasers matched that of April, at £900m, although lending had risen from £700m in May last year.
Buy-to-let remortgaging was valued at £1.9bn, no change on April, but a slight fall on the £2bn of buy-to-let remortgaging seen last year.
Smee said: “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.”
He added: “In the summer months, we expect home buying activity to continue with an even split between first-time buyers and home movers but in greater numbers than in the winter months; we expect buy-to-let to remain subdued compared to its recent 2015 peak.”