Peter Williams, executive director of the Intermediary Mortgage Lenders Association, said: “It is encouraging to see the surge of lending in CML’s latest figures which suggests that first-time buyer and buy-to-let activity can prosper side-by-side. But what we must avoid is the creation of a two-tier housing market where property ownership becomes the preserve of the lucky few who can save for a deposit or borrow funds from relatives, while those less fortunate are left to bear growing rental costs.
“The shift towards higher loan to values shows that lenders are pushing back against restrictive capital requirements and finding ways to help more people onto the property ladder. The Help to Buy mortgage guarantees should improve things further, so the pressure is on George Osborne to unveil a detailed proposal that lives up to expectations.
“Rather than weighing lenders and brokers down with excessive guidance on affordability, the Chancellor should trust the rules set out in the Mortgage Market Review and focus instead on ensuring fair pricing, effective administration and capital relief. It is vital that specialist lenders are supported alongside mainstream banks so as not to unbalance the market.”
Jeremy Duncombe, director, Legal & General Mortgage Club, agrees that the news is very positive. “It’s pleasing to see yet more positive data adding to the renewed optimism of recent weeks.
“Confidence is key to any market and it seems that the housing market has shaken off the lethargy it has been dogged with. However it is still relatively early days and the importance of Government stimulus measures in this recovery must not be forgotten.
“There is still a lot of hard work ahead to ensure that this upward trajectory continues over the long term.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, agrees that things are moving in the right direction: “Government attempts to get the banks lending again are clearly working. While all sectors of the lending market saw an improvement in lending volumes in May, it was first-time buyers who benefited the most.
“Average deposits have fallen and continue to do so as lenders offer more innovation and better rates at higher LTVs. With the Government expected to supply more detail on the Help to Buy guarantee scheme in the next fortnight, we expect the number of first-time buyers to continue to improve.
“While we are some way from the volumes of lending done at the height of the housing boom, things are certainly moving in the right direction.
“However, we need confidence to continue to improve to persuade more homeowners to trade up and move on, resulting in more stock coming to market.”
David Whittaker, managing director of Mortgages for Business, sounds a more cautious note: “House prices are rising, the first-time buyer market is starting to buzz again and mortgage availability has improved significantly.
“Confidence is returning, with lenders, investors and owner-occupiers increasingly bullish about the UK’s economic outlook. The return of first-time buyers is particularly welcome news and will help rebalance the market away from an over-reliance on wealthier buyers.
“But first-time buyer levels are still fairly low by historic standards and are particularly low outside of London and the South East. It is still difficult to save for a deposit, which is keeping demand very healthy in the rental sector.
“Supply of homes continues to fall way short of that demand – both in the rental and owner-occupier sectors – which is keeping yields high for buy-to-let investors.”
