"Given that the economy and housing market are closely linked, this has contributed to the activity plateau since the start of the year."
Gross mortgage lending was therefore an estimated £60.3bn in Q2. This is a 3% increase on Q1 and a 6% increase on the £57.1bn lent in Q2 2016.
UK Finance Senior Economist, Mohammad Jamei, said: "A period of belt-tightening now seems to be underway as inflation begins to erode consumer spending power, and consumer confidence weakens. Given that the economy and housing market are closely linked, this has contributed to the activity plateau since the start of the year.
"Looking ahead, housing market activity is likely to reflect economic conditions – a deterioration would likely dampen first-time buyer numbers and homeowners remortgaging – the factors that have supported lending recently."
Jonathan Sealey, CEO of Hope Capital, commented: “Although gross mortgage lending in June was up on May this year and in June last year, it’s clear that the issue of long term affordability is still evident, with gross mortgage lending down 1% on the first half of 2016.
“The buy-to-let market’s weak start to the year has played a part in terms of its contribution to overall net mortgage lending, and the political and economic uncertainty is still affecting the market. In these uncertain times, some homeowners will take the wait and see approach. Others have been rushing to remortgage on to long term fixed rate deals, giving themselves protection from rises until 2022.
“However, inflation unexpectedly fell earlier this week, and this fall puts the interest rate hike later this year in doubt. A rise in rates against the backdrop of falling wages would negatively impact consumer spending which would be bad news for the economy. It will therefore be interesting to see how the Inflation Report next month addresses these figures and how they will factor into future prospects.”
