UK mortgage lending falls in July before rate rise and as Brexit worries persist
House price growth across the country has been slowing in recent months
Mortgage lending in Britain dropped last month before the Bank of England raised interest rates above the level set since the financial crisis, banking industry figures showed.
The industry body UK Finance said the number of mortgages approved for new house purchases dropped by 4.3 per cent in July to 39,584 compared with the same month a year ago. City economists had forecast around 40,700, suggesting a renewed slowdown in the housing market.
The Bank of England raised the cost of borrowing earlier this month, making it more expensive for prospective homeowners to secure a mortgage, while concerns about a no-deal Brexit are also discouraging buyers. Analysts said the rise in rates to 0.75 per cent from 0.5 per cent could further weigh on demand for mortgages.
Samuel Tombs, the chief UK economist at consultancy Pantheon Macroeconomics, said the figures showed the housing market was fundamentally slowing, adding: “the hike [by the Bank of England] will unnerve many buyers.”
The latest snapshot of the mortgage market comes as British households face sluggish wage growth and higher levels of inflation since the Brexit vote.
“The broader economic outlook remains mixed, with households continuing to see their incomes being squeezed by rising inflation,” said Peter Tyler, a director at UK Finance.