The number of mortgage approvals was 60,058 in August, compared to the average of 66,734 over the previous six months, figures from the Bank of England show.
But overall lending to households increased by £3.9bn in August, compared to the average monthly increase of £4.1bn over the previous six months. Total lending to individuals increased by £4.5bn in August, compared to the average of £4.8bn over the previous six months.
And lending secured on dwellings increased by £2.9bn in August, compared to the average of £3.3bn over the previous six months.
Matt Andrews, Managing Director, Bluestone Mortgages, comments:
“Even though today’s lending figures may show a slight softening in demand, they also confirm that growth remains broadly consistent. This should reassure many that the market is not experiencing the post-referendum turmoil that some scaremongers predicted, and is instead simply showing the effects of the summer lull.
“As momentum in the housing market begins to build, brokers will have a vital role to play in helping their customers find the best deals available, depending on their individual circumstances, whatever they may be. However, self-employed customers, contractors with inconsistent cash flows, or those who have an adverse credit history, for example, do not always fit into mainstream banks’ typical lending criteria, and yet are often entirely worthy of credit.
“It is these customers who are most in need of a deeper underwriting experience to ensure their situation is fully understood. The UK workforce is increasingly shifting to include more contractors and freelancers, and amidst this changing dynamic, it is paramount that lenders’ decisions are made on a case by case basis so that this growing pool of legitimate borrowers is catered for.”
Andrew McPhillips, Chief Economist at Yorkshire Building Society, said:
“The fact that mortgage lending is continuing to grow despite decreasing mortgage approvals shows that lending is being driven by growth in house prices rather than transactions. We expect the effects of uncertainty around the EU referendum to begin to feed through in the coming months, which may cause activity to slow as buyers and sellers postpone getting onto the property ladder until the future of the UK economy is clearer.
“However, the underlying lack of supply should cause house prices to continue to increase in the long term which is likely to push up mortgage lending. In order to ensure that the market grows more steadily in the long term, more homes must be built to bring supply in line with demand and make properties more affordable.
“Tackling the supply deficit is likely to take a number of years, so it is crucial that the government considers introducing helping-hand measures in order to enable more people to get onto the property ladder in the short-term as well. The Government could, for example, reform Stamp Duty by making it a seller’s tax rather than a buyer’s to reduce costs for first-time buyers and those moving up the property ladder."
