Mortgage approvals slump to 18-month low - BoE

According to the figures, mortgage approvals fell to 60,912 in the first month after Britain’s vote to leave the EU.

This was the lowest value since January 2015.

The figure was down from 64,152 in June and below economists’ expectations of 62,000.

Approvals have steadily fallen from a peak of 72,760 in February when many buyers bought forward house purchases to the start of the year to avoid the additional stamp duty charge for second homes and buy-to-let properties that came into effect at the start of April.

The Bank figures also showed that the Brexit vote affected consumer borrowing in June, after net consumer credit rose by a monthly total of £1.2 billion, the smallest rise since August 2015 and well below the consensus expectation of £1.7 billion increase. It was the first annual decline in consumer credit growth since December 2014.

Consumer confidence bounced back in August after a slump in July, but remains appreciably lower than before the Brexit vote.

Economists believe mortgage approvals are now likely to fall further over the coming months as economic uncertainty surrounding the Brexit vote causes people to wait and see if the housing market dips before deciding to move.

Surveyors in the UK said new buyer enquiries fell sharply in the two months since the referendum result.

Howard Archer, chief economist at IHS Global Insight, said the marked slowdown added weight to his prediction that house prices could ease back by about 3 per cent over the latter months of 2016, and there could be a further fall of 5 per cent next year.

“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 a willingness to engage in major transactions,” he said.

Scott Bowman at Capital Economics, added: “With Brexit uncertainty having driven new buyer enquiries lower in recent months, we suspect that mortgage approvals have further to fall over the rest of the year.”