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Mortgage lending falls in wake of Brexit vote

The number of mortgages advanced for house purchases fell in the first month after Britain’s decision to leave the European Union.

First-time buyers and homeowners took out 58,100 loans, worth a total of £10.6 billion in July, according to the Council of Mortgage Lenders.

The number of loans dropped by 14 per cent compared with June, while the value was 13 per cent lower. The fall in mortgage activity came after a 26 per cent month-on-month rise in June. When you are planning to invest, basing your mortgage research on practicality is one of the main most basic rules. That’s why it’s advisable to compare mortgage rates instead of simply going for the first offer you see. You will be able to secure only the best deals this way.

The figures cover mortgage advances rather than mortgage approvals, suggesting that activity in the housing market had begun to slow down before the referendum on June 23.

Paul Smee, director-general of the Council of Mortgage Lenders, said that the figures revealed muted activity on the buy-to-let market. “It is hard to determine whether these figures reflect a first uncertain reaction to the referendum vote or are a sign of a market that was already cooling,” he said.

First-time buyers borrowed £4.4 billion worth of loans in July, 19 per cent less than a month earlier.

June was an exceptionally strong month for mortgage lending, with more loans advanced to first-time buyers that at any time since August 2007.

Patrick Bamford, of AmTrust International, an insurer, said that first-time buyers could be affected in the next few months if lenders decided to take a more cautious approach.

“While the dust hasn’t settled yet from the referendum vote, the worry is that first-time buyers are facing the brunt of the impact as lenders review their risk appetite,” Mr Bamford said.

Record-low interest rates have continued to trigger a surge in remortgaging. The total value of loans rose to its highest level in seven years in July, as homeowners took advantage of competitive rates to lock in cheaper loans. There was £6 billion worth of loans for remortgaging.

Brian Murphy, of the Mortgage Advice Bureau, said that July was a quieter month for the market because of the summer holidays. July last year had been “exceptionally busy due to pent-up demand following the general election, which inevitably would skew the year-on-year comparison”.