Number of mortgage approvals at lowest since January 2015

The number of mortgages approved by British banks fell to a 19-month low in August, new figures show.

According to the British Bankers’ Association, 36,997 mortgages were approved in August, down from 37,672 in July and 21% lower than a year ago.

Housing market activity has slowed following a surge in the first quarter after borrowers brought forward transactions to beat the 1 April stamp duty deadline on buy-to-let and second homes.

Uncertainty over the impact of the EU referendum has also caused many buyers to adopt a more cautious approach and put off purchases.

Overall mortgage lending was 1% higher than a year ago at £12.4 billion, while remortgaging approvals were 6% lower than in August 2015.

The data was collected before the Bank of England reduced interest rates to 0.25%.

Dr Rebecca Harding, chief economist at the BBA, said the statistics “point to a softer housing market”.

“Mortgage borrowing is growing at a slower pace than it has for the last few months reflecting both the slowdown in housing market growth after the April spike and broader trends in the sector,” she said.

Jeff Poole, managing director of Freedom Consumer Finance, said: “August’s figures from the BBA show that year-on-year borrowing patterns have not been affected by the UK’s decision to leave the EU. Whilst it is still too early to see if there will be any long-term effects of the vote for Brexit, this data sends a positive message for those hoping to access credit.

Economists believe housing market activity is likely to slow in the coming months and prices will weaken as uncertainty following the Brexit vote continues to weigh on consumer confidence.

To help boost growth the Bank of England has cut interest rates from 0.50% to 0.25% – the lowest on record. It is the first interest rate cut since 2009, when the financial crisis was at its peak.

Howard Archer, chief UK economist at IHS Global Insight, said a slight dip in house prices was likely in 2017, possibly by around 3%.

He said: “We expect house prices to be essentially flat over the final months of 2016. While softer housing market activity is likely to limit house prices, we suspect that the current resilience of the economy and a shortage of properties will prevent prices from falling over the final months of 2016.”