Would-be buyers who have sat on the sidelines during interest rate rises are back in the market, despite their borrowing capacities being cut by a third.

New data from the Australian Bureau of Statistics reveals home lending was up by 6.2 per cent in May compared to the previous month.

Ray White chief economist Nerida Conisbee says a tough rental market may be driving some people into the market.

Press PLAY below to hear why buyers are returning to the market