Lending on the rise again

The mortgage market is starting to recover at last after a difficult few months. Over this period, it became apparent that some first-time buyers were waiting to purchase UK property following an earlier rush of people looking to beat the stamp duty holiday.

In March, the government opted not to extend the two-year exemption for first timers which meant that they avoided having to pay the one per cent levy on the price of a house that they were buying at a price between £125,000 and £250,000. This was reported as leading to a drop in the number of people who were looking to get themselves their first mortgage through March and April.

However, the Council of Mortgage Lenders (CML) has now reported an increase in the number of mortgages again as of May.

During the month, the amount of money loaned to people for the purposes of them purchasing a house rose by some 36 per cent compared to the month prior. It also showed a considerable year-on-year rise, with the figure being 29 per cent higher than it was in May of 2011.

In particular, the first-time buyer market showed a sizeable growth throughout May. The number of loans given to people taken their primary step onto the property ladder rose from 12,700 in April to 18,100 in May.

CML director general Paul Smee said: "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.

First timer loans on their own are now worth some £1.5 billion to the UK economy over the month of May.

"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."