The Council of Mortgage Lenders believes a “modest recovery” is underway despite lending shrinking again in May.
The trade body estimates £16.2bn was lent last month, which is 3 per cent lower than the amount lent 12 months ago.
In the first five months of 2015, March was the only month where lending rose year-on-year.
On a monthly basis, lending increased 2 per cent from £15.8bn in April.
The CML says forward looking data, like Bank of England data on approvals, suggests the market can expect an increase in lending over the coming months.
But CML economist Mohammad Jamei adds: “The economic environment is one that should support increased activity in the near term, coupled with low mortgage rates. But while we expect these factors to support activity, there is a limited upside, driven mainly by affordability constraints.”
E.surv business development director Richard Sexton says: “The mortgage market has shown stability against all the odds. Last April saw the new MMR regulations come into play, whilst this April, we were anticipating the most uncertain election in a century. Against these headwinds, the lending recovery has been remarkably resilient. That stability is encouraging – signalling a potential sustainable long-term trend, rather than the volatile days of recent years.”