House purchase approvals fell 21 per cent in August year-on-year to 36,997, according to the British Bankers’ Association.
The first eight months of 2016 also saw house purchases fall 2 per cent compared to the same period the year before.
Gross mortgage borrowing of £12.4bn in August was 1 per cent higher than in August 2015, according to the BBA.
Remortgaging approval volumes fell six per cent in August year-on-year. However, these approvals were up 16 per cent for the first eight months of 2016 compared to the same period of 2015.
BBA chief economist Rebecca Harding says: “Mortgage borrowing is growing at a slower pace than it has for the last few months reflecting both the slowdown in housing market growth after the April spike and broader trends in the sector.”
Yorkshire Building Society chief economist Andrew McPhillips says: “The fact that mortgage lending is still rising despite a fall in property transactions is a result of increasing house prices which are causing people to take out larger loans to afford a property.
“Although lending has shown strong growth over the past few years, mortgage approvals have been relatively flat and further increases in house prices could dampen market activity in the future, potentially causing growth in mortgage lending to slow.”
Mortgage Advice Bureau head of lending Brian Murphy says: “Given that August 2015 was an exceptionally busy period, due to pent up market demand following the General Election, today’s figures would suggest that the market this year is in line with normal seasonal activity.
“This is further borne out when we look at the number of loans approved for purchase transactions, which are actually only 1.7 per cent lower than August 2015.
“It’s also worth noting that the data released today was collected prior to the decision to cut interest rates in August, therefore the knock on effect of lenders repricing downwards and launching new, more competitively priced products which we’ve seen in the last few weeks, leading to attractive options for those who are perhaps considering buying or re-mortgaging aren’t evident in the figures reported here.”