Mortgage approvals down to 11-month low amid impact over EU vote uncertainty


Mortgage approvals slipped to an 11-month low in April in a further sign that uncertainty surrounding the EU referendum is weighing on the housing market. 

The number of loan approvals to buy homes fell to 66,250 in April from 70,305 the month before, according to the Bank of England's Money and Credit report.

The report also revealed that mortgage lending fell back to £0.3 billion in April, compared to £7.4 billion in March.

Economists said the slowdown was partly caused by people rushing to buy properties ahead of the 3% stamp duty rise on buy-to-let homes, which came into force last month.

It comes as a separate study also revealed a slowdown in annual house price growth in April.

The average price of a UK house edged up 0.2% to £204,368 in May, but year-on-year growth slipped back to 4.7% from 4.9% in April, according to Nationwide Building Society.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the Bank's report showed the forthcoming EU referendum was having an impact on the housing market. 

"The adverse impact of uncertainty about the outcome of the EU referendum can be seen clearly across all the latest lending data."

He added: "The drop in approvals reflects April's rise in stamp duty on buy-to-let and second home purchases, as well as the impact of Brexit risk on London's housing market.

"If, as we expect, the UK opts to remain in the EU later this month, all types of lending likely will bounce back."

Consumer credit also stepped back in April at £1.3 billion, falling from £1.8 billion in March, according to the Bank's report.

It also showed a slowdown in corporate lending, with loans to non-financial businesses dropping back by £0.1 billion in April, down from an average monthly increase of £0.9 billion over the last six months. 

Economist Sam Alderson, of the Centre for Economics and Business Research, added: "Measures of business confidence suggest that concerns about the economy have risen over the course of 2016, particularly given uncertainties about the momentum of the global and domestic economy and the result of the UK's referendum on EU membership in June.

"This appears to have weighed on investment and spending plans of businesses in recent months and has particularly dented borrowing by larger UK firms."