This is according to the latest Housing Market Activity Report by Connells Survey and Valuation which shows that residential mortgage valuation activity rose by over one fifth (22%) in May compared to May 2010, an increase of 9% compared to April.
Activity has now risen year-on-year for six successive months.
Connells says this increase has been largely down to increasing demand from first-time buyers. In May, there were 26% more valuations for first-timers conducted compared to a year ago – an increase of one tenth compared to April 2011. First-time buyers now make up 34% of all valuation activity.
The increasing number of homeowners looking to move also played a crucial role in the rise in the increasing activity compared to April. The number of valuations for home movers in May was up one tenth (+11%) on the previous month, albeit a more modest rise of 1% compared to May 2010.
Colin Dorman, business development director of Connells Survey and Valuation, commented: “Housing market activity has resumed its slow and steady upwards trajectory, driven by an upturn at the lower end of the market.
“Many first-time buyers have been encouraged to enter the market by the uptick in the number of higher LTV products available recently. However, for the average first-time buyer, mortgage finance still presents a formidable challenge. The increasing variety of products is offset against comparatively high rates - alongside overly stringent criteria demanded by lenders.”
May also saw an increase in activity from remortgagors. The number of valuations for remortgagors rose by 8% compared to April, a rise of 70% year-on-year – albeit from a very low base.
Colin Dorman said: “Remortgaging levels picked up in May as competition between lenders improved, and borrowers took advantage of more lucrative fixed rates on offer. While the remortgage market is slowly flickering back into life, fears over interest rate rises are fanning the flames. When the MPC does finally hike the Bank rate, remortgaging activity will heat up further as borrowers look to avoid being stung unexpectedly by spiralling mortgage costs."
While the number of valuations for buy-to-let investors dipped slightly in May, down 3% compared to April, they were actually 42% more conducted than a year ago.
Colin Dorman concluded: “Buy-to-let investors have not been slow to recognise the opportunity presented by colossal tenant demand and record high rents, and many experienced property investors have re-entered the market in the past year.
“The structure of the housing market has changed, and until we see a prolonged improvement in the number of first-time buyers able to secure a mortgage, the private rental sector will continue to play a crucial role in housing the UK’s growing population.”
