April saw a slowdown in house purchase approvals following the rush to beat the stamp duty deadline.
According to the latest Mortgage Monitor index from e.surv, the number of house purchase approvals fell 19.4% in April to 57,512.
This follows a previous three-month average of 72,693 house purchase approvals since the start of the year.
The slowdown in house purchase approvals comes after buyers brought forward transactions to beat the introduction of the stamp duty charge.
House purchase lending dropped 14.9% from the 67,594 loans granted in April 2015. Before this fall there had been annual rises of 20.2%, 17.9% and 14.7% as stamp duty changes caused an uplift in overall lending levels. This also follows unprecedented high lending across the previous quarter, fuelled by buy-to-let borrowing.
Richard Sexton, director of e.surv chartered surveyors, said: “The mortgage market is entering a more turbulent phase. As lenders steer for safety, three different forces are at work. First and foremost are the effects of the looming EU referendum on confidence and certainty for the UK. Whichever way the result, financial markets could see rapid shifts in the days and weeks beforehand – and especially immediately afterwards.
“Secondly, the lending market is in one sense beginning to return to its normal rhythm after suffering a hangover from the party of buy-to-let activity seen earlier this year. As this excitement begins to wear off, a more normalised lending climate is beginning to reassert itself.
“Home lending is solid beneath this predicted surface slowdown – but now the headache is by no means over as new economic risks cause understandable caution from lenders. The third major break on mortgage lending is a deeper foreboding about the solidity of the UK economy – quite subtle but potentially more major.”
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