The number of mortgage approvals has hit its lowest figure in a year and a half, signalling a cooling in the housing market following the Brexit vote.
According to the latest figures from the Bank of England, the number of mortgages approved fell to 60,912 in July, down from 64,152 the previous month.
This was the lowest since January 2015 and below what a majority of economists were predicting.
The amount lent out for house purchase £10.4 billion, down from £11.1 billion in June.
The number of approvals for remortgaging was 43,084, compared to the average of 41,887 over the previous six months.
Mortgage approvals for house purchases have progressively slowed following a boom in borrowing in the run-up to April’s stamp duty hike as buyers brought forward transactions to beat the deadline.
The housing market has also been hit by uncertainty over the impact of the EU referendum, with many buyers adopting a more cautious approach and putting off purchases.
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 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.
He said: “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.”
Jonathan Sealey, CEO of Hope Capital, said: “The number of loan approvals for house purchase was lower than the previous six month average, suggesting that many buyers have been waiting to see how Brexit will affect house prices and the market in general.
“In contrast and unsurprisingly, remortgaging is up, highlighting how an increasing number of homeowners are continuing to take full advantage of falling mortgage rates and I expect to see a more ‘normal’ market to emerge in September.”
What Mortgage has teamed up with London & Country to offer you expert advice on the right mortgage deal.
Whether you’re buying a new home, remortgaging to a new deal or buying an investment property, L&C can help – and you’ll pay no fee for their advice. To find out more, click here.
Loading ...