The latest Housing Market Activity Report by Connells Survey & Valuation has reported return to growth for the mortgage market last month.

The total number of residential valuations conducted during May rose by 4% compared to April. However on an annual basis this represented an increase of 18%.

First-time buyer numbers climbed during the month, following the dip in April. The number of valuations for first-time buyers represented an 8% month on month rise and a 12% increase compared to May 2011. The number of first-time buyer valuations represented 32% of all those conducted by Connells in May, compared to 31% in April.

In May, there were 4% more valuations for home movers than in April, representing a 5% increase year-on-year.

“Despite fears of a prolonged hangover after the passing of the stamp duty deadline, the immediate after-effects of the rush are already dissipating, with a steady improvement on April’s level of buyer activity,” said John Bagshaw, corporate services director of Connells Survey & Valuation

He added: “The additional working days in May compared to April helped buoy activity, with improved weather towards the end of the month contributing to improved buyer interest. We have seen encouraging signs of underlying demand in spite of the backdrop of a recessive economic climate, the re-imposition of stamp duty for first-timers, and lenders tightening their criteria.

“First-time buyer activity has shown its resilience following April’s lull, and the improvement has filtered up the chain, allowing an increased number of home owners to move.”

There were 23% more valuations conducted during the month than a year ago.

“While the remortgage market is in better health than a year ago, the chance of a rise in interest rates has diminished significantly with the UK in recession, and this has dampened many borrowers’ enthusiasm to remortgage in the short-term – especially those on tracker rates,” said Bagshaw. “Nevertheless, with the financial chaos in the eurozone pushing up funding costs and rates such as SVRs likely to go one way, we may see strengthening remortgage activity over the medium term.”

The report found the number of valuations for buy-to-let investors also increased in May, with 3% more than in April. This represented an increase of 78% annually – albeit from a low base.

Bagshaw said: “Buy-to-let remains a key point of growth in the mortgage market, with investors tempted by the high yields and growing tenant demand. With buy-to-let mortgage rates still historically low, the contrast to rising rental income is too good an opportunity for many to pass by.

“As long as competition among lenders remains strong, supporting the range and affordability of buy-to-let mortgage products, valuations activity in the sector should see long-term growth.”