The British Bankers Association has said that the number of new mortgages approved for house buying bounced back in May.

Mays gross mortgage lending of £18.2bn was the highest on record at 18% above the outturn for the much shorter working month of April and 27% higher than May last year.

Seasonally adjusted underlying net mortgage lending (gross lending minus repayments and redemptions) rose by £5.7bn, compared with £5.1bn in April, £4.3bn in May 2005 and an average of £5.1bn over recent months.

There were 201,506 mortgage approvals (for all purposes) during May, with a total value of £21.2bn. Comparisons with April are distorted, as approvals data are related to the number of working days in a month and there were 21 working days in May and only 18 in April, but the number of approvals was 8% higher than in May 2005.

The average approval for house purchase fell in May to £139,300, though still some 11% higher than a year earlier.

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The Key Facts
- Mays gross lending of £18,234mn was 18% higher than Aprils total of £15,500mn and 27% higher than the £14,339mn in May 2005.- Seasonally adjusted net mortgage lending rose by £5,731mn, compared with £5,065mn in April. The strong increase in May was much higher than the average of +£5,140mn over the previous six months whilst the annual growth rate is around 13%.

- Compared to the same month a year earlier, Mays loan approvals for house purchase were 20% higher by number, 33% higher by value. At 40% of all approvals, these were at their highest share since July 2002. Remortgaging approvals were 8% higher by number and 28% higher by value; however approvals for equity withdrawal were 7% lower by number and 1% lower by value.

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David Dooks, BBA director of statistics, said: “Although numbers of approvals are still well below the levels of early 2004, the record level of gross lending and stronger net lending in May shows mortgage market activity to be healthy. And whilst Mays consumer credit data show an interchange of borrowing between credit cards and overdrafts, the increase in overall unsecured borrowing was in line with recent trends.”