The number of approvals for remortgaging was 36,003, higher than the average of 33,090 over the previous six months, but also below April's figure of 35,930.
The number of approvals for other purposes was 10,693, compared to the average of 9,665 over the previous six months.
However the report also shows that secured lending increased by £2.1 billion in May, compared to the average monthly increase of £1.8 billion over the previous six months. The three-month annualised and twelve-month growth rates were 1.9% and 1.8% respectively. Gross lending secured on dwellings was £16.6 billion and repayments were £15.0 billion.
Brian Murphy, Head of Lending at Mortgage Advice Bureau, said:
“Today’s figures show that the remortgage market has sprung into life over the last year. Remortgaging accounted for almost one in three loans approved last month as more people were given the go-ahead to switch than at any point since January 2014. Low rates and rising house prices are giving many homeowners a stronger incentive to switch their loan than they have had for years.
“The best prices are available to borrowers with the most equity in their homes, so it is a logical step for people to look closely at how much value their property has gained in recent years and see whether this throws the door open to a cheaper deal. Some homeowners will appreciate the chance to take cash out of their home, while others will simply find the cost of switching is outweighed by the benefits of lower repayments.
“Overall loan approvals in May slowed slightly compared with April, but the fact that the election outcome was decided without major upheaval bodes well for growth to resume later this year. Our own data shows a rise in mortgage applications last month and lender appetite remains strong.”
Mark Dyason, director, Edinburgh Mortgage Advice, commented:
"Lending is likely to further strengthen in the second half of the year, as lenders look to catch up on their targets. It goes without saying, of course, that everything could be blown spectacularly off course in the event of fall-out from a Grexit.
"With Greece, we are entering the unknown, and this could hit both supply and demand.
"After a stronger May, remortgage activity will rise further in the months ahead as a number of major lenders have large rate cessations. In other words, a lot of people will be finishing their existing rates and moving onto their SVR.
"Demand overall remains high but many lenders are struggling to cope. Service levels have fallen and the time to completion has been stretched.
"For borrowers, the ability of a lender to process a mortgage in a reasonable timeframe is almost as important these days as the rate itself.
"Most of the product competition among lenders will continue to be for borrowers at low loan-to-values.
"While lenders are accommodating first time buyers, they are still underserved. The competition in higher LTVs will increase but only slowly."
Danny Waters, Chief Executive Officer of Enterprise Finance, added:
“Peoples’ increasing confidence in their future prospects is translating into a renewed appetite for borrowing. While the economic forecast looked uncertain some spending was postponed – now the picture has become clearer, people are forging ahead with their spending plans.
“We are experiencing strong demand for secured loans as homeowners look to free up funds for a variety of projects, be it home improvements or big ticket purchases they now feel less conscious about purchasing than they might have done as we exited the recession. Our Secured Loan Index reported demand for secured loans hitting a five-year high in March and there has been no let-up in consumer appetite since.”
