The number of mortgages taken out for house purchases dropped by 14% in July, the latest figures from mortgage lenders show, as the housing market slowed down around the time of the EU referendum vote.
A total of 58,100 loans were taken out by first-time buyers and movers during the month, worth a combined £10.6bn. The number was down 14% on June’s figure, while the value was 13% lower. July’s fall in activity followed a 26% increase in new mortgages in June.
The figures cover loans as they are advanced to borrowers, so suggest applications for mortgages were slowing down ahead of the UK’s Brexit decision.
Paul Smee, director-general of the Council of Mortgage Lenders (CML), said: “These figures cover the first full month of lending following the EU referendum. They show a month-on-month decline in first-time buyer and home mover activity, and muted activity on the buy-to-let market.
“It is hard to determine whether these figures reflect a first uncertain reaction to the referendum vote, or are a sign of a market that was already cooling.”
The CML’s monthly report showed 28,200 mortgages were taken out by first-time buyers in July, a fall of 19% on June. The number of loans taken by movers was down by 9% month on month at 29,900. Remortgaging activity increased, as mortgage rates continued to fall to new record lows.
Some 33,400 loans were taken out by remortgagors, up 3% on June. Meanwhile, landlords continued to return to the market slowly after the rush of activity ahead of the change to stamp duty on second homes in April.
Buy-to-let loans worth £3bn were advanced during the month – up 3% on June but down by 21% year on year.
Smee said it would be “quite some time before a full assessment can be made” of the impact of the Brexit decision on the property market.
Jeremy Leaf, former residential chairman of the Royal Institution of Chartered Surveyors, said the figures appeared to signal caution on the part of lenders and prospective home buyers ahead of the referendum.
“There was clearly some stand-off before and immediately after the outcome was known,” he said. “There appears to have been an immediate nervousness following the referendum and clearly a pause before taking action.”
He added: “It is understandable that people have been taking longer to commit to a decision as big as buying a home. That is only natural – the referendum result was a huge earthquake and it is not unreasonable for people to pause and reflect on how it will affect their lives.”
Peter Williams, executive director of the Intermediary Mortgage Lenders Association, said mortgage availability was continuing to improve and rates were reaching new lows.
“Remortgage activity in particular is setting the pace, with strong competition giving many consumers an incentive to explore lower repayments in the full understanding that rates won’t go much lower,” he said.
However, he added that the end of the help-to-buy mortgage guarantee at the end of the year needed to be considered. “Despite Brexit being a government priority, Westminster cannot afford to put off action to ensure that access to homeownership is supported for the long term,” he said.
“The new chancellor needs to deliver in his autumn statement in November.”
Source: www.theguardian.com
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