Britain’s housing market showed signs of slowing in August with the number of mortgages approved by banks falling to its lowest level since January 2015 and analysts said they expected further weakness ahead as Brexit uncertainty dampens demand next year.
British banks approved 36,997 mortgages for house purchases last month, down from 37,672 in July and 21 percent lower than in August 2015, the British Bankers’ Association said on Monday.
The figures extended a slowdown which began at the start of this year ahead of the introduction of a new tax on homes bought by landlords in April and Britain’s referendum decision to leave the European Union in June.
“The outlook for stagnation in households’ real incomes next year, as inflation picks up and hiring slows sharply, points to a prolonged period of weakness in mortgage lending ahead,” Samuel Tombs, an economist at Pantheon Macroeconomics, said.
A rise of 1.5 percent in the average mortgage value in August pointed to a slowdown in house price growth over coming months, Tombs said.
Howard Archer, an economist at IHS Global Insight, said house prices would likely be flat until the end of 2016 and fall by 3 percent in 2017 as the start of talks over Britain’s exit from the EU exacerbated uncertainty about the economic outlook.
The BBA said growth in net credit card lending slowed in August, rising by 136 million pounds compared with an increase of 290 million pounds in July.
But consumer borrowing overall remained strong with personal loans and overdrafts rising by a net 343 million pounds, the biggest increase since May, underscoring how consumers appear to have taken the Brexit vote in their stride.
The data was collected after the Bank of England cut interest rates to a new record low of 0.25 percent on Aug. 4.
The BBA figures do not include lending by mutually owned building societies, which accounts for around third of mortgages. The next release of the more comprehensive Bank of England lending data is due on Thursday.