The number of mortgage enquiries dropped in Q2, according to figures from the Intermediary Mortgage Lenders Association.
Intermediaries dealt with an average of 44 new enquiries, down from 49 in the first quarter. The number of enquiries received from first-time buyers and home-movers dropped to 46, both down from 55 in Q1.
Remortgagors showed slightly more caution, with average enquiry levels dropping to 38 per intermediary in Q2, compared to 48 in the first quarter.
However, more of these enquiries translated into AIPs. Enquiries resulting in approval is at 59 per cent, up from 55 per cent in Q1.
IMLA executive director Peter Williams says: “A dip in enquiry volumes is no more than might be expected in an atmosphere of growing uncertainty. It suggests some buyers reined back on purchasing property in Q2, possibly waiting to see the outcome of the EU referendum and any impact on property prices.
“However, those that pressed on with a mortgage enquiry saw more success in getting an agreement-in-principle, as lenders continued supporting the market, despite the political headwinds.
“Borrowers must now find their way in the new ultra-low interest rate environment. Mortgage pricing is already very low and fixed rate mortgages are unlikely to fall further due to being priced from the swap curve. However, savers may well feel the difference of falling rates.
“Any inflation rise would further eat into any savings, making building the cash for a deposit more challenging. The new climate is certainly better for borrowers than for savers.”
He adds that next quarter will bring a clearer view of the consequences of the Brexit vote, but warns that Brexit is not the only element impacting the market.
Williams says: “The increased tax burdens for landlords from stamp duty reforms, changes to the wear and tear allowance, and the upcoming reduction in interest relief, may see many remortgage to a lower rate as one way of clawing back some lost income.”