Mortgage lending plummeted in July following the decision to leave the EU, new figures show.
According to the latest monthly report from the Council of Mortgage Lenders, home movers and first-time buyers borrowed £10.6 billion July.
They took out 58,100 loans, down 14% on June and 13% on the previous year.
Paul Smee, director general of the CML, said: “These figures cover the first full month of lending following the EU referendum.
“It is hard to determine whether these figures reflect a first uncertain reaction to the referendum vote, or are a sign of a market which was already cooling. It will be quite some time before a full assessment can be made.”
Housing market activity has slowed following a surge in the first quarter after the rush to beat the 1 April stamp duty deadline on buy-to-let and second homes.
Prospective homebuyers have also been holding back on purchases due to uncertainty over the EU referendum.
The report showed first-time buyers took out 28,200 loans in July, down 19% on June to £4.4 billion. The number of loans by home movers fell 11% £6.2 billion.
Remortgage activity went up 7% on the previous month to £6 billion.
Landlord borrowing remained slow following April’s stamp duty increase with buy-to-let activity up 3% on June.
Richard Pike, Phoebus Software sales and marketing director, said: “The figures confirmed today by the CML are most telling when you look at them compared to July last year. Month on month, given the uncertainty caused by the EU referendum result, it was almost to be expected that things were more subdued. However, the market was looking good before the vote so we now have to consider whether the result itself has had a genuine effect on appetite and that it’s not just a seasonal dip, which we experience every year.
“Whether because of the usual seasonal inactivity, or a continued knock on effect of the referendum, I do expect August to show similar lower levels as in July. However, with interest rates as low as they are, and more confidence being reported regarding the overall economy, it is likely that things will pick up for home buyers and first-time-buyers in the last quarter.”
The latest data from the Office for National Statistics revealed that annual house price growth slowed in July but remained high at 8.3%.
Monthly house prices rose by 0.4%, taking the average property value in the UK to £216,750.
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