The Bank of England says the number of new mortgages fell to 60,912 in July, down from 64,152 the previous month and to a lower level than many analysts predicted.
The amount lent for house purchase was £10.4 billion, down from £11.1 billion in June, although remortgaging did increase - there were 43,084 cases in July, compared to the average of 41,887 over the previous six months.
The period under consideration does include the first full month after the Brexit vote in the EU referendum but does not include the drop in Bank of England base rate from 0.5 per cent to 0.25 per cent, which was announced three weeks ago.
“July and August are always traditionally quieter times of the year for the market; the real test will come in September when people get back from holiday. Then we will see whether they are making decisions to buy or whether they put these on hold until there is further clarity” says Mark Harris, chief executive of mortgage broker SPF Private Clients.
North London estate agent and former RICS residential chairman Jeremy Leaf says that despite the mortgage figures, the housing market remains resilient. “We are certainly finding this at the coalface with strong determination being shown by genuine buyers and sellers who are aiming to find a fair price between them so that they can move on.” he adds.
Howard Archer, chief UK economist at IHS Global Insight, says house prices could ease back by three per cent during the rest of this year, with a possible five per cent drop in 2017 following the Brexit decision.
And a spokesman from business consultancy Capital Ecomics says Brexit uncertainty means it believes “mortgage approvals have further to fall over the rest of the year.”
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