Mortgage borrowing was down 4 per cent year-on-year during October as the uncertainty of Britain's decision to leave the European Union took hold.
According to official figures from the trade association for the UK banking sector, house purchase approval numbers dipped 10 per cent lower during the month than in October 2015 and in the first 10 months of 2016 were 4 per cent lower than in the same period of 2015.
The BBA stated remortgaging approvals were similar to those in October 2015 but in the first 10 months of 2016 were 13 per cent higher than in the equivalent period of 2015. Other advances were 9 per cent higher than a year ago.
Dr Rebecca Harding, chief economist at the BBA, said: “Consumer credit is now growing at its fastest rate since November 2006, reflecting strong retail sales growth. Consumer confidence remains robust as borrowers take advantage of record low interest rates.
“Mortgage approvals ticked up a little October. There has only been a relatively modest increase in activity since the Bank of England cut rates in August."
Consumer confidence remains robust as borrowers take advantage of record low interest rates.Dr Rebecca HardingShe added there was a "slight increase" in business borrowing in October, however, businesses are increasingly going back to capital markets as a means to raise funding and holding cash deposits, suggesting they are building up cash reserves for ready access to resources should the need arise.
Matt Andrews, managing director of Bluestone Mortgages, said an annual decrease in mortgage approvals reflects a more cautious approach from lenders, likely as a result of the current uncertainty in the housing market and wider economy.
However, Mr Andrews said fewer approvals and the continuing squeeze on affordability is pricing an increasing number of would-be homeowners out of the market.
He said: “The borrowers who are set to suffer the most under these conditions are those who do not fit traditional high-street lending criteria.
"Automated credit scoring models seldom take into account the nuances often found in the credit profiles of contractors, the self-employed, or those with adverse histories."
Andy Knee, chief executive of conveyancing service provider LMS, said: “The EU referendum and resulting record-low rates are driving families to capitalise and reduce their monthly mortgage bills.
“In general, the UK housing market is well positioned for the challenges that 2017 poses. The latest figures from the Department for Communities and Local Government show a spike in new build dwelling starts and completions for England in the third quarter, in comparison to the previous quarter.
"The chancellor’s announcement of a Housing Infrastructure fund worth £2.3bn in yesterday’s (23 November) Autumn Statement is a sign of the government’s intent to tackle the housing supply issue, crucial for market stability, which will make the UK property market more favourable for first-time buyers and remortgagers alike.”
