He said: "The figures announced by the Council of Mortgage Lenders today reveal that mortgage lending is £1 billion lower in May than in April. Lending for house purchase also dropped to 48% from 51% in April, possibly indicating a cooling down of the property market.
"While the property market has long been predicted to slow down, people should be wary about taking this to mean a crash is around the corner. The economic environment is very different to the one in the early 1990s, when unemployment and interest rates were high. Today, despite recent interest rate rises, interest rates are still historically low and unemployment levels too are very low. In addition, the average household spends considerably less on its mortgage payments than a decade ago and demand for property continues to outstrip supply.
"Homebuyers though, do still need to budget carefully and ensure they don't overstretch themselves financially. They should factor in further interest rate rises to make sure that they can still comfortably afford their monthly mortgage repayments."
Increasing numbers of first timers take that first step on the property ladder
"It is encouraging to see that the proportion of first time buyers is increasing, albeit quite modestly. Accounting for 31% of total lending – up from 28% in April and the same level as in March – the figure is still lower than its historical norm of 40-45%, but at least its getting back on track and heading in the right direction."
Price continues to drive the market
"The high proportion of lending on variable rates – 68% of all lending – clearly demonstrates that price is still the key driver in the market. While there has been a narrowing in the price differential between fixed and variable rates, variable rates in general are still considerably lower than fixed rates. Even the expectation that interest rates may rise further over the coming months, albeit modestly, has done little to persuade borrowers to opt for the security of a fixed rate deal."
