Mortgage approvals fell to an 18-month low in July as aftershocks from the EU referendum result rippled out into the housing market.
Figures from the Bank of England showed a drop from 64,152 approvals by banks and building societies in June to 60,912 in July, the lowest monthly total since January 2015.
It was also a continuation of a recent trend, following a spike in February to 73,000, which has prompted some analysts to predict that house prices will fall over the next 12 months.
Earlier this month, the Royal Institution of Chartered Surveyors said estate agents were gloomy about their prospects for the year ahead after buying inquiries fell dramatically in July for the fourth month running.
With reports showing that Brexit vote uncertainty had driven down new buyer inquiries in recent months, “we suspect that mortgage approvals have further to fall over the rest of the year”, said Scott Bowman, a UK economist at Capital Economics.
Howard Archer, the chief economist at IHS Global Insight, said the marked slowdown added weight to his prediction that house prices could ease back by about 3% over the latter months of 2016, and there could be a further fall of 5% next year.
“We believe housing market activity is likely to be limited over the coming months and prices will weaken, as heightened uncertainty following the UK’s vote to leave the EU weighs down on consumer confidence and a willingness to engage in major transactions,” he said.
