Gross mortgage lending remained stable in July at £21.4 billion, according to the Council of Mortgage Lenders.
This closely matches June’s gross lending total of £21.5 billion and is 1% lower than July last year
However, Bob Pannell, CML chief economist, said the subdued nature of property transactions and mortgage lending was consistent with a less positive backdrop for house purchase activity post-referendum.
He said: “The Bank of England expects stronger economic headwinds to build as we move into 2017, and the Monetary Policy Committee’s package of monetary policy measures represents a spirited effort to lean against these on a timely basis. The MPC has pencilled in a further cut in Bank Rate later this year, but aims to avoid negative interest rate territory.
“The Term Funding Scheme should boost market sentiment a little, by engineering broader cuts to rates for existing mortgage borrowers than would have been the case, but it is not clear how well the Bank’s actions will underpin borrower demand in a more adverse economic climate.”
John Eastgate, director of sales at OneSavings Bank, said: “The early indications are that fears of a significant slump in the immediate aftermath of the EU referendum have been overblown somewhat. While the medium to long term economic impact of the decision is far from clear, the mortgage market would appear to be in business as usual mode.
“Buyers, and in particular, investors, who are in a position to enter the market are just getting on with it, rather than sitting on their hands and waiting for the political and economic uncertainty of Brexit to dissipate. Moreover, the Bank of England’s package of monetary stimulus measures opens up the possibility of even cheaper mortgage products.”
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 latest figures from the British Bankers’ Association show that mortgage approvals for house purchase fell 5% In July to 37,662 – an 18-month low
Howard Archer, chief UK economist at IHS Global Insight, said: “We suspect that house prices could ease back by around 3% over the latter months of 2016 and there could well be a further 5% drop in 2017. This suspicion is fuelled by the BBA reporting that mortgage approvals slowed to an 18-month low in July and by the latest CML data.
“We believe housing market activity is likely to be limited over the coming months and prices will weaken as heightened uncertainty following the UK’s vote to leave the EU weighs down on consumer confidence and willingness to engage in major transactions, and also hampers economic activity.”
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