Year on year gross mortgage lending was up 8% in May at £19.7bn, figures out from the British Bankers’ Association reveal.
The BBA says this is the highest level of new business since November, which reflects strong remortgaging activity and is also in line with the usual yearly pattern of stronger lending going into the summer months.
There were 204,800 mortgages approved in May, which is up only 2% from May 2006, with an aggregate value of £24.2bn.
The average loan approved for house purchase was £157,100, some 13% higher than the year earlier.
Underlying net mortgage lending, calculated from gross lending minus repayments and redemptions, rose by £5.8bn.
This was considerably higher than both on April’s increase of £5.1bn and the recent average of £5.4bn.
Annual growth in net mortgage lending continued to stay around 14%.
David Dooks, director of statistics at the BBA, says: “Contrary to the recent stable trend, the banks’ gross and net mortgage lending strengthened in May, reflecting an improved competitive position, rather than a general rise in mortgage demand across the market.
“And, because of strong approvals in May, the banks’ higher market share is likely to continue over the next couple of months.
“Although retail sales have grown recently, credit card borrowing continues to slow down as consumers prefer to pay up front rather than borrowing to spend.”
When compared to May 2006, house purchase approvals were down 4% by number but up 9% by value.
Remortgaging approvals were up 13% by number and 25% by value, while approvals for equity withdrawal were down 3% by number but 6% higher by value.