Mortgage approvals for house purchase fall to lowest levels in nearly six years
Brexit turmoil is showing signs of weighing down the mortgage market, as the number of loans approved to home buyers fell to its lowest levels in nearly six years in February.
Some 35,299 mortgage approvals for house purchase were recorded in February – the lowest figure since April 2013, according to figures from UK Finance.
Housing market experts said it is “puzzling” why approvals have managed to hold up for as long as they have.
The fall in approvals comes despite lenders offering some increasingly competitive deals in recent weeks and making particularly strong efforts to attract first-time buyers.
Several recent housing market surveys have pointed to potential buyers taking a “wait and see” approach while political and economic uncertainties continue.
Commenting on the report, Samuel Tombs, chief UK economist at Pantheon Macroeconomics said the sharp fall in approvals “is almost entirely due to the recent jump in Brexit uncertainty”.
He said: “Surveys, such as the Rics (Royal Institution of Chartered Surveyors) residential market survey, have pointed to a downturn in house-buyer demand since November, so the prior resilience of approvals in January had been puzzling”.
Mr Tombs continued: “We expect approvals to continue to fall over the coming months.
“Lending, however, should recover in the second half of this year, provided a no-deal Brexit is averted. Wage growth has picked up and banks remain willing to lend.”
Howard Archer, chief economic adviser to the EY ITEM Club, said the figures “point to the housing market currently being very much on the back foot”, taking mortgage approvals well below a 38,000 to 40,000 range that largely held through 2018.
He said the prospect of Brexit delays means further uncertainty is likely to weigh on the housing market.
“This has caused us to trim our forecast for house price growth over 2019 to just 1%.
“This assumes that the UK does ultimately leave with a deal and that there is some reduction in uncertainty.”
Meanwhile, continuing a trend, people are still piling money into accounts where it can be easily accessed if needed.
UK Finance said personal deposits in total grew by 0.6% in the year to February – with 2.7% growth in deposits held in instant access accounts.