"Incredibly, the market upsurge doesn't seem to be ending, with record pricing and approvals, stimulated by cheap mortgage rates at an average of around 1.9%."
This followed variability in the previous couple of months in anticipation of the reduction in stamp duty ending, which has been extended to the end of June.
Net borrowing in May was slightly higher than the monthly average for the six months to April 2021 and above the average of £4.2 billion in the year to February 2020.
Mortgage approvals for house purchase were 87,500 in May, up slightly from 86,900 in April. They have fallen from a recent peak of 103,200 in November, but remain above pre-February 2020 levels.
Approvals for remortgaging with a different lender rose slightly to 34,800 in May, from 33,400 in April, although this remains low compared to the months running up to February 2020.
Tomer Aboody, director of MT Finance, commented: "The uptick in mortgage approvals compared with April illustrates just how determined buyers are to beat the stamp duty holiday end date. Incredibly, the market upsurge doesn't seem to be ending, with record pricing and approvals, stimulated by cheap mortgage rates at an average of around 1.9%. This is making that dream home a reality for many borrowers as it becomes more affordable than they could have imagined.
"While the market is still strong, numbers are down on the record breaking March which saw buyers rush before the previous stamp duty end.
"The market will be further fuelled by government stimulus in the near future at least, which can only mean continuing rising house prices."
Andrew Montlake, managing director of Coreco, added: “Even though the chance of beating the stamp duty deadline was remote, mortgage approvals remained high in May. This shows that record low borrowing rates and the radical shift to homeworking have been as much a driver of transaction levels as tax savings. The knock-on effect of a fundamental lack of stock is pent-up demand, especially among first-time buyers and landlords, and this will support activity levels over the summer. The increased appetite among lenders for self-employed borrowers is also boosting mortgage take-up. Lenders are increasingly concluding that self-employment may be less of a risk than employment in the current market.”