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Brexit latest: Mortgage approvals fall again in August Brexit latest: Mortgage approvals fall again in August
(about 5 hours later)
The mortgage market continued to slow in August in the wake of the Brexit vote, the latest statistics from the British Bankers Association show. The mortgage market continued to slow in August in the wake of the Brexit vote, the latest statistics from the British Bankers’ Association show.
The number of loan approvals for house purchase by high street banks was 36,997 in August, down 21 per cent on the same month a year earlier and the lowest monthly total since January 2015.The number of loan approvals for house purchase by high street banks was 36,997 in August, down 21 per cent on the same month a year earlier and the lowest monthly total since January 2015.
Rebecca Harding, chief economist of the BBA, said the statistics pointed to a "softer housing market".Rebecca Harding, chief economist of the BBA, said the statistics pointed to a "softer housing market".
So far the main gauges of national house prices have shown little post-referendum impact, with the Office for National Satistics index and those of the Nationwide and the Halifax all holding up in July and August. So far the main gauges of national house prices have shown little post-referendum impact, with the Office for National Statistics index and those of the Nationwide and the Halifax all holding up in July and August.
But many City of London analysts expect mortgage approvals and average house prices to ultimately decline in the wake of the result.But many City of London analysts expect mortgage approvals and average house prices to ultimately decline in the wake of the result.
"We believe housing market activity is likely to be increasingly pressurized by appreciable uncertainty following the UK’s vote to leave the EU constraining consumer confidence and willingness to engage in major transactions, as well as hampering economic activity" said Howard Archer of IHS Global Insight, forecasting a drop in prices of around 3 per cent in 2017. "We believe housing market activity is likely to be increasingly pressurised by appreciable uncertainty following the UK’s vote to leave the EU, constraining consumer confidence and willingness to engage in major transactions, as well as hampering economic activity" said Howard Archer of IHS Global Insight, forecasting a drop in prices of around 3 per cent in 2017.
"We believe that uncertainty will mount in 2017 once the UK formally launches divorce proceedings from the EU by triggering Article 50 and the negotiations increasingly come to the forefront.""We believe that uncertainty will mount in 2017 once the UK formally launches divorce proceedings from the EU by triggering Article 50 and the negotiations increasingly come to the forefront."
Forward indicators from the Royal Institution of Chartered Surveyors (RICS) pointed to a fall in house prices immediately after the 23 June referendum, but a stabilisation in August. Forward indicators from the Royal Institution of Chartered Surveyors (RICS) pointed to a fall in house prices immediately after the June referendum, but a stabilisation in August.
Before the referendum the Treasury said that in the event of a Leave vote house prices could be 10-18 per cent lower by 2018 than otherwise - warnings that were dismissed as scaremongering by the pro-Brexit side. Before the referendum the Treasury said that in the event of a Leave vote, house prices could be 10-18 per cent lower by 2018 than otherwise – warnings that were dismissed as scaremongering by the pro-Brexit side.
Mortgage approvals, as measured by the BBA, hit a recent monthly peak of 46,335 in January 2016 and have been on a broadly declining trend since then.Mortgage approvals, as measured by the BBA, hit a recent monthly peak of 46,335 in January 2016 and have been on a broadly declining trend since then.
The BBA's figures do not include mortgage lending by building socities, which account for around a third of the market. The BBA's figures do not include mortgage lending by building societies, which account for around a third of the market.
But more complete Bank of England figures show a similar trend.But more complete Bank of England figures show a similar trend.
The next Bank of England lending report will be published on Thursday.The next Bank of England lending report will be published on Thursday.
The Bank of England cut interest rates to 0.25 per cent in early August, in part to support the housing market.The Bank of England cut interest rates to 0.25 per cent in early August, in part to support the housing market.
Analysts said it was too early to judge whether this monetary stimulus had had any impact on demand for mortgages and approvals given the time it takes for loan applications to work through the system.Analysts said it was too early to judge whether this monetary stimulus had had any impact on demand for mortgages and approvals given the time it takes for loan applications to work through the system.
Today's BBA lending figures also showed that consumer credit continued to grow strongly in August, rising at an annual rate of 6.4 per cent, the same as July and the highest since December 2006.Today's BBA lending figures also showed that consumer credit continued to grow strongly in August, rising at an annual rate of 6.4 per cent, the same as July and the highest since December 2006.
Aggregate consumer credit rose by £500m in August and net mortgage borrowing by £1bn.Aggregate consumer credit rose by £500m in August and net mortgage borrowing by £1bn.
The value of all mortgage approvals for house purchases was £6.6bn, flat on July.The value of all mortgage approvals for house purchases was £6.6bn, flat on July.