Tuesday 30 August 2016 11:49 am

Mortgage approvals fell to 18-month low in the first full month since the Brexit vote

Mortgage approvals hit an 18-month low last month, according to figures from the Bank of England.

In the first full month after the Brexit vote, approvals fell to 60,912 – down from 64,152 approvals in June. The number of approvals has been falling since March, when the stamp duty hike on second homes came into effect.

There was a 12.4 per cent fall in mortgage approvals in July compared to the same month last year.

The total amount loaned for home purchases was £10.4bn, compared to £11.1bn in June.

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"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 willingness to engage in major transactions," said Howard Archer, chief UK and European economist at IHS Global Insight.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "July and August are always traditionally quieter times of year for the market; the real test will come in September when people get back from holiday. Then we will see whether they are making decisions to buy or whether they put these on hold until there is further clarity."

Analysts at Shore Capital said the Brexit vote has made it difficult to assess whether the figures represent a "a ripple moving through the market" due to uncertainty before and after the referendum, or whether "there is something more substantial at work".

"There has now been a full seven weeks since the vote and this measure of the market should have picked up any improvement on the basis that, from various anecdotal sources the shock impact of the result was both limited and short-lived," Shore Capital said.

"If there was pre-referendum caution by potential buyers, and there was a softening visible in the month prior, we would have expected some form of rebound, even to a modest extent, in July."

The data does not line-up with the house builders' assessment of the property market, the analysts said, pointing to Persimmons' recent assertion that visitor numbers to its sites were up by 20 per cent compared to last year.

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