Figures from the Bank of England for August have revealed the lowest number of mortgage approvals since November 2014, with analysts saying it is a sign of the housing market cooling since the vote to leave the European Union.
There were 60,058 mortgage approvals in August, down on the 60,925 recorded in July and making it three consecutive months of falling numbers. Compared to August 2015, this year’s figure was 16 per cent lower.
The housing market generally sees a reduced level of activity in the summer due to fewer people looking to move house over these months, so the reduced number of mortgages approved was not too big a surprise to economists. However, it is still believed to be a sign of the housing market slowing down in the coming months, with the UK’s economy shrouded in uncertainty in the aftermath of Brexit.
Additionally, the Bank of England cut interest rates from 0.5 to 0.25 per cent in August, the first cut since the financial crisis back in 2009, so the month’s figures are the first since the rate change.
However, statistics also showed that consumers are still spending and borrowing heavily, causing a headache for the Bank of England with regards to whether to cut the interest rate again this year.
Howard Archer, chief economist of IHS Global Insight, said: “Consumers were clearly prepared to continue borrowing and spending in August, and it is notable that confidence has recovered markedly after slumping in July in the immediate aftermath of the Brexit vote.
“We suspect that the fundamentals for consumers will become less favourable over the coming months, with purchasing power likely diminishing and the labour market softening. On the one hand, this may make people more cautious over borrowing, but on the other hand, it may increase the need for some people to borrow.”