This follows a 20.9% drop in applications in April compared to March, and an 11.6% rise in applications in March compared to February. Mortgage applications in May were 20.8% higher than May 2010.
Three-quarters (76%) of all new borrowers chose fixed rate products in May, the same percentage that chose fixed rate deals in April. In May 2010 60% of new mortgage applicants chose fixed rate products.
The average loan size on mortgage applications in May was £131,426 compared to £124,328 in April, a rise of 5.7%.
The average loan to value on mortgage applications fell slightly from 70.5% in April to 70.4% in May, and the average deposit put down by a mortgage applicant in May was £55,259 compared to £52,024 in April.
The average age of a mortgage applicant in the UK in May was 37 years 7 months.
Remortgages rose by 25.5% in May compared to April, a substantial increase following two consecutive months of falling applications. Mortgage applications in May were also 41% higher than May 2011.
However, the percentage of homeowners choosing fixed rate over variable and tracker products fell for the second consecutive month from 67% to 60%.
The average loan size of remortgage applications in May fell back from the previous month, down from £151,171 to £138,809 a drop of 8.2%.
Across all regions, mortgage applications were up in May, the North in particular rebounding, with applications up 37% following a dramatic fall in activity in April. East Anglia saw a 48.1% rise in applications in May.
The average loan size (excluding London) on mortgage applications in May was highest in the South East at £170,703 and lowest in the East Midlands at £96,428.
In terms of product type, 91% of applicants in the North West chose fixed rate mortgage deals in May, compared to 63% of applicants in the South West. Average LTVs were highest in Yorkshire & Humber (80.7%) and lowest in the South West (65.4%), which means the average borrower in Yorkshire & Humber puts down a 20% deposit compared to 35% deposit by a borrower in the South West.
The oldest mortgage applicants in May were in the South West, averaging 42 years 7 months, while the youngest were in Wales, averaging 35 years 7 months, a difference of seven years in age of applicants between the respective areas.
For remortgages, 71% of applications in the North West chose fixed rate deals during May, compared to just 40% in Yorkshire & Humber. The average LTV on remortgage applications was highest in the South West (72.3%) and lowest in East Anglia (55%).
Brian Murphy, head of lending at independent mortgage broker Mortgage Advice Bureau, said:“The 20% rebound in mortgage activity in May reflects the impact that an unusually high cluster of public holidays had on the market during April, with the second half of the month practically a write off in terms of new mortgage applications. May has seen a welcome return to normal activity levels across the board – both new borrowers buying property and those looking to refinance existing arrangements.
“For those borrowers who are active in the market, fixed rate mortgages continue to take precedence possibly as a result of the uncertainty that the whole debate around, when, and by how much interest rates will ultimately rise tends to spark. May witnessed three-quarters of purchase customers continuing to opt for fixed deals very much in-line with the trend so far in 2011.
“For the second consecutive month, there was a drop-off in the proportion of remortgage borrowers opting for fixed rates, with slightly less than 60% in May electing to fix, down from 67% in April and 73% in March. Despite this exodus, fixed rate deals still remain in the ascendancy.
“Mortgage product availability continues to improve with the number of deals in May up approximately 8% compared to April. Also, crucially, more higher loan-to-value products are coming onto the market resulting in lenders sharpening the pricing on rates in this sector.”
The average LTV on mortgage applications (excluding remortgages) was 66.6% in May compared to 64.4% in April. The average mortgage loan size was £255,379 in May compared to £280,618 in April, a 9% fall. The average deposit put down by a mortgage applicant in May was £128,073.
Mortgage applications (excluding remortgages) were up 52.8% in May compared to April, and 57.1% of applicants chose fixed rate deals in May compared to 58.2% in April.
The average age of a purchase mortgage applicant in London in May was 38 years 4 months.
On the remortgage side, the average LTV on remortgage applications in May was 61.4% compared to 63.6% in April, while the average loan size in May was £224,845.
Andrew Montlake, director of London-based independent mortgage broker Coreco Group, said: “The mortgage market has recovered much of the lost ground in May following a desolate second half of April. Enquiry levels surged last month both on the purchase and remortgage side, with purchase applications up more than 50%.
“We expect to see activity levels continue to trend upwards for the rest of the year as lenders re-enter the market in earnest and engage in a price war, particularly at loan-to-value levels of 75% and below.
“An interesting tactic adopted by a couple of lenders which shows a renewed desire to lend again, is releasing certain mortgage products for a short period of time, normally seven days, before withdrawing them.
“Also, remortgage rates have dropped to levels that make it worthwhile for even those homeowners sat on the lowest variable rates to consider re financing.
“However, there’s still a long way to go in the higher loan-to-value bracket and, whilst improving, a real and sustained recovery is still being hampered by the availability of finance at that level and a continued shortage of quality housing stock.”
