May sees Mortgage market return to growth

The mortgage market returned to growth in May following from the slowdown in April caused by the stamp duty exemption deadline, according to the latest Housing Market Activity Report by Connells Survey and Valuation.  
The total number of residential valuations conducted during May rose by 4% compared to April.  This represents an annual increase of 18%.
The number of first-time buyers increased during May by 8% compared to April.  This is a 12% increase from May 2011.  The number of first-time buyer valuations made up 32% of the total conducted by Connells in May.  This is a 1% rise from the proportion in April.  
This increase in first-time buyer activity contributed to an increase in the number of homeowners moving house.  In May, there were 4% more valuation for home movers compared to April.  This is a 5% increase compared to May 2011.
John Bagshaw, Corporate Services Director of Connells Survey & Valuation commented:
“Despite fears of a prolonged hangover after the passing of the stamp duty deadline, the immediate after-effects of the rush are already dissipating, with a steady improvement on April’s level of buyer activity.
“The additional working days in May compared to April helped buoy activity, with improved weather towards the end of the month contributing to improved buyer interest.  We have seen encouraging signs of underlying demand in spite of the backdrop of a recessive economic climate, the re-imposition of stamp duty for first-timers, and lenders tightening their criteria.  First-time buyer activity has shown its resilience following April’s lull, and the improvement has filtered up the chain, allowing an increased number of home owners to move.”
Althoughthe number of remortgage valuations remained steady on a monthly basis, the figure was 23% higher than that of May 2011.
John Bagshaw continues:
“While the remortgage market is in better health than a year ago, the chance of a rise in interest rates has diminished significantly with the UK in recession, and this has dampened many borrowers’ enthusiasm to remortgage in the short-term — especially those on tracker rates.  Nevertheless, with the financial chaos in the eurozone pushing up funding costs and rates such as SVRs likely to go one way, we may see strengthening remortgage activity over the medium term.”
The number of valuations for buy-to-let investors also increased in May, by 3% compared with April’s figure.  This represents an annual increase of 78%, although this is from a low base.
John Bagshaw adds:
“Buy-to-let remains a key point of growth in the mortgage market, with investors tempted by the high yields and growing tenant demand.  With buy-to-let mortgage rates still historically low, the contrast to rising rental income is too good an opportunity for many to pass by.  As long as competition among lenders remains strong, supporting the range and affordability of buy-to-let mortgage products, valuations activity in the sector should see long-term growth.”
This appears to show an optimistic view of the future, with steady increases in activity despite the current economic situation.  However, with the situation in the eurozone vulnerable, this leads to a property market possibly in a weak position should the Euro collapse.  
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