Data from the major banks shows another record rise in net mortgage lending.
Research by the British Bankers' Association shows mortgage lending rose by £5.3bn to £399.6bn, while other consumer lending increased by £0.9bn to £83.5bn.
Gross mortgage lending totaled £14.2bn – 24% more than in April – and 52% more than in May last year. Repayment levels have not fallen and the Association points to the strength of new lending as responsible for the record increases in net lending.
The research also showed a further upturn in mortgage loans approved, with 253,900 approved for a total of £16.5bn – 25% by number and 39% by value higher than at the same time a year ago. Loans for house purchase featured strongly, with the average value of £88,700 some 17% higher than a year earlier.
BBA chief executive, Ian Mullen, says: “The current strength of the mortgage market is sustained, as homeowners and buyers, wishing to lock-in interest rates, seek out better mortgage deals for house purchase or re-mortgage.”
“But, just as it is important that lenders remain prudent in their lending practices, borrowers should assess both their current and future financial circumstances when making borrowing decisions. The shortage of housing stock, particularly in the South East, means that first-time buyers are hit hardest by rising property prices, and that in itself will slow the housing market at some point. However, the current level of loan approvals suggests that borrowing will continue to remain high in the near future”.
Meanwhile, growth in unsecured borrowing slowed in May and credit card borrowing was muted, with new spending being offset by repayments.