The housing finance market is responding to low interest rates. According to figures released by the Australian Bureau of Statistics on Friday, the total value of housing finance commitments rose two per cent in May (in seasonally adjusted terms). This follows a fall of 0.1 per cent in April and a rise of 3.6 per cent in March.The value of new housing finance has increased by 15.5 per cent over the 12 months to May.The strongest segment of the market is lending to owner-occupiers, which rose 2.3 per cent in May. Investment housing loans have increased by 1.5 per cent.The number of housing finance commitments for owner-occupiers rose 1.8 per cent. Average loan size was $302,200.First-home buyer activity remains relatively weak, with just 14.6 per cent of housing finance commitments in May coming from first-home buyers. In May last year, first-home buyers made up 18.1 per cent of the market.In a commentary, Commonwealth Bank economist Diana Mousina said that lending for the construction of new dwellings increased by 26.5 per cent over the year to May.Mousina said this was positive for the economy's "growth transition".She said the 25 basis point rate cut in May would provide further support to housing activity in the near term.