This represents a 24% rise from £9.9 billion in April and a 13% rise from May 2011 (£10.8 billion).
In today’s CML market commentary, CML chief economist Bob Pannell comments:
“The government has recently announced a number of measures to counter the adverse effects from the Eurozone crisis. It clearly senses an opportunity to bolster home ownership and housing activity, and we look forward to hearing more details about the “funding for lending” initiative which seeks to deliver this.
“Meanwhile, mortgage lending continues to seesaw, albeit against a broadly flat market. Unfortunately, a number of one-off factors, such as the Diamond Jubilee and the Olympics, are set to distort market indicators over the coming months, and it may be the autumn before we can more accurately gauge the state of the market.”
Russell Quirk, founder of the low cost estate agents emoov.co.uk, commented:
"At first glance, such a big big month-on-month jump in lending should set the doom-mongers sobbing into their cornflakes. With mortgage advances and house prices intrinsically linked, such healthy growth appears very encouraging for the market as a whole.
"But the figure is flattered somewhat by the fact that lending in April was very low, after many first-time buyers rushed to complete before the end of the stamp duty holiday at the end of March.
"Even so, this May figure is nearly as high as the March peak - and is still 13% up on the same time last year. Both of which are signs that the market is slowly regaining some confidence. As house prices start nudging up, we're seeing more offers being made on properties for sale - and the quality of offers is improving too.
"More and more, they are serious offers from people who really want to buy rather than those who are just fishing for bargains. Little by little, would-be buyers are coming off the fence."
Jonathan Samuels, CEO of Dragonfly Property Finance, also commented:
"A rise in lending was always likely in May as the end of the stamp duty holiday triggered a brief fall in activity. This sharp upwards spike doesn't signify the return of the mortgage market, just a return to historically low activity levels. Only buy-to-let is showing any genuine signs of life.
"The owner-occupier mortgage market remains lacklustre, due to ongoing weakness in demand and a now inveterate conservatism among the high street lenders. Falling inflation is a rare positive for the consumer but it's nowhere near enough to make people commit to a home purchase. You need confidence to do that and confidence is in short supply.
"The funding for lending initiative is exactly that at the moment: an initiative. Whether it has any material impact on mortgage activity remains to be seen."
Paul Hunt, managing director of Phoebus Software said:
“Many will hail the massive rise in lending on the month as a sign of returning positivity among mortgage lenders and it’s certainly a relief that stamp duty doesn’t appear to have put an ongoing brake on the market – but it’s the annual growth in lending that’s really significant.
"In a year in which a European nation has partially defaulted and appeared set to leave the eurozone altogether and in which the UK slid back into recession, that mortgage lenders have managed to achieve a substantial increase in their activity is testament to the innovative and proactive approach they have taken. In spite of the absence of economic growth and amid growing fiscal hurdles in the property market, the lending industry has found a way to sustainably and significantly boost activity in the property market”.
Brian Murphy, head of lending at Mortgage Advice Bureau, comments:
“The CML’s gross mortgage lending levels in 2012 largely mirror MAB’s own experience. After the surge in activity in March – when first time-buyers sought to beat the end to the stamp duty exemption – April saw a dip before applications bounced back in May to their highest level in 2012.
“So far this year MAB has seen growth in application levels in what is a broadly flat market. We expect activity to continue to fluctuate in the next few months, with distractions from major events a key factor. The Jubilee celebrations in June and the Olympics next month are likely to have a short-term effect, with the London market in particular likely to feel the impact of hosting the ‘Games.
“As such we welcome the Government’s latest initiative to stimulate lending to businesses and consumers, and look forward to seeing more details in due course. We hope this quickly feeds through to mortgage lending and helps to reverse the trend for tightening criteria and higher rates, which have been a dragging factor on activity levels in recent months.”
