Mortgage approvals are nine per cent lower than the same point last year, but UK consumers were still borrowing to power the economy in the five months after EU referendum.
The number of house purchase mortgage approvals fell slightly in November to 40,659, down from 40,835 in October, according to the British Bankers’ Association (BBA), although remortgaging levels increased markedly.
Analysts had been expecting house purchase mortgage approvals – a bellwether of the UK’s crucial housing market – to increase to around 41,500. Investors will closely watch the Bank of England’s data, released next Wednesday, to see if the slowdown has been felt across the sector.
The BBA data gives an early measure of UK banking activity, although its data is less comprehensive than next week’s release from the Bank of England.
Meanwhile consumer credit growth fell in November, although it remains healthy at around a six per cent annual rate.
Rebecca Harding, chief economist at the BBA, said: “Consumer credit growth continues to be strong, despite falling back a little in November, reflecting strong retail sales in recent months.”
UK consumers have stayed relatively upbeat in the six months after the referendum, as predictions of recession in the event of a Leave vote failed to materialise.
However, economists will be watching data closely as devalued sterling – the most obvious Brexit vote effect – begins to feed through to higher inflation rates.
The looming threat of inflation along with historically low interest rates – lowered further in the aftermath of the EU referendum – may be prompting consumers to act now before longer-term effects feed through.
“The reduction in interest rates in August may have boosted remortgaging approvals, with consumers looking to take advantage of the current economic conditions and lock-in lower interest rates,” said Harding.
The softening of the housing market could have negative implications for house prices.
Howard Archer, chief UK and Europe economist at IHS Markit, said: "The fact that the housing market is seemingly struggling for momentum reinforces our suspicion that it is likely to find life increasingly difficult as 2017 progresses.
"Consequently, we suspect that house prices will come under increasing pressure during 2017 and will likely be essentially flat over the year," he added.