Market worries: mortgage lending falls to six-month low

The number of new mortgages approved by banks fell to a six-month low in September - but the annual figure shows a significant 13.5 per cent increase.

The banking trade body UK Finance says there were 42,310 loans for new homes last month, down from 42,527 in August, although remortgaging totals hit their highest monthly level - 32,649 - in two years. 

UK Finance says that the strength of the annual boost may be exaggerated by unusual circumstances - this time last year mortgage lending was unusually low, making the annual difference this time round appear larger than expected.

For that reason, most analysts are cautious about the housing market.

Jeremy Leaf, north London estate agent and former RICS residential chairman, said: “At first glance these figures look remarkably good considering present Brexit shenanigans, even though they do reflect what was happening in the market a few months previously.

“But when you look more closely it is clear that the market was particularly flat this time last year, which is giving an unrealistic shine to this September’s numbers.

“Nevertheless, they demonstrate that buyers and sellers are carrying on regardless albeit at more realistic price levels. Otherwise deals are simply are not happening.”

Howard Archer, chief economic adviser to the EY Item Club - an influential economists’ body - says: “The fact that mortgage approvals eased back for a second month running in September to be at a six-month low suggests that housing market activity remains constrained amid major uncertainties.” 

And Gareth Lewis, commercial director of lender MT Finance, says: “First-time buyers are keen to get on the ladder and have a wide range of affordable mortgages to choose from. Sentiment from them is positive; they feel now is as good a time as any to buy. But it is the next phase - the second steppers with familes who need more space - who may be finding it harder to make the jump and are feeling the pinch more.”

Meanwhile Tom Mundy, chief operation officer at rental supplier Goodlord, says: "We’re seeing parallels across the UK rental market. This summer saw a surge in activity, with void periods hitting year to date lows. However, recent weeks indicate that this burst of demand is already dissipating, as void periods move upwards and rent prices begin to fluctuate across regions. 

“This will in part be due to the looming October 31 Brexit deadline and could mark the tapering off of the current phase of property market optimism, although the overall market metrics continue to point to stability.”