The Council of Mortgage Lenders (CML) said it had seen a 24 per cent increase on the previous month in the value of mortgages taken out by first-time buyers. That ended a weak run of figures starting in January, when lending to those taking their first step on the ladder dived 27 per cent.
That helped push overall lending up by 22 per cent, according to The Guardian.
The CML said cheap mortgage rates meant first-time buyers were putting the smallest proportion of their income towards their mortgage payments since its records began in 2005. The slice of monthly income spent on mortgage interest and capital repayments has fallen from 18.7 per cent last May to 17.9 per cent in June.
Paul Smee, the director general of the CML, said: “After a slower than expected start to the year, lending now appears to be picking up as we expected, and in line with our recently revised forecasts.”
However, he cautioned that Bank of England warnings that interest rates could rise early next year would temper buyer enthusiasm and lead to another relatively flat year for transactions and lending values.
Figures for the quarter showed the continued boom in buy to let. The number of loans to homebuyers in the second quarter was down 7.7 per cent from the same period last year. In contrast, the number of loans to buy-to-let landlords was up more than 25 per cent.
The report also showed that after a slow start to the year, remortgage activity experienced notable gains on both a monthly and yearly basis, jumping by more than a third.
“Notable this month is the uptick in remortgage activity among homeowners, perhaps reflecting an increased desire to lock into competitively priced mortgage deals in advance of any rise in rates. It is likely that people are now beginning to feel a rate rise is a realistic prospect, and not just a distant theoretical possibility,” Smee said.
The report said: “Overall in June, the value of homeowner loans for house purchase accounted for 54 per cent of gross lending, while remortgage activity accounted for 25 per cent. Buy to let as a proportion of total lending remained at around 17 per cent but still makes up a larger portion of total lending compared to the same time last year.”
In its April report, the CML attributed the lending dip to the general election, claiming that people were delaying their homebuying plans until they found out the result.
The gross value of loans this quarter decreased compared with last year, dropping by 6 per cent for first-time buyers and 3.5 per cent for home movers. Meanwhile, the value of buy-to-let loans has risen by 39.7 per cent, seeing their value soar to £8.8bn. Gross lending as a whole for the quarter came to £52.2bn, 2 per cent more than the same period last year.