Mortgage lending drop 'points to more subdued property market'
Mortgage lenders recorded their first annual drop in lending for more than a year in July as the EU referendum and the increase in stamp duty led to a more "subdued" housing market.
The Council of Mortgage Lenders (CML) said £21.4 billion worth of mortgages were handed out in July, a 1% decline on the same month last year. The figure was also down on June's total of £21.5 billion.
The CML, which represents banks and building societies, said that in the UK economy, "a less favourable backdrop for house purchase activity appears to be emerging".
CML chief economist Bob Pannell added: "The subdued nature of property transactions and mortgage lending in July are consistent with a less positive backdrop for house purchase activity post-referendum.
"The Term Funding Scheme should boost market sentiment a little, by engineering broader cuts to rates for existing mortgage borrowers than would have been the case, but it is not clear how well the Bank of England's actions will underpin borrower demand in a more adverse economic climate."
The Bank cut interest rates to fresh historic lows of 0.25% earlier this month in a bid to stimulate the economy.
However, the CML noted: "There is awareness, within the Bank and externally, that monetary policy cannot be relied on to fully mitigate the adverse economic impacts associated with Brexit uncertainty."
As well as the EU referendum, a stamp duty hike for buy-to-let investors has caused disruption to the housing market.
The increase came into force on April 1 and investors rushed to snap up properties before the deadline. This meant sales were bunched up earlier in the year and skewed later figures.
The CML data comes after the British Bankers' Association (BBA) said on Wednesday that the number of mortgage approvals slumped to a one-and-half-year low in the month after the Brexit vote.
Loans for house purchases slipped 5% to an 18-month low of 37,662 in July, down from 39,763 in June, figures from the BBA showed.