The number of mortgage approvals dropped nearly 20% in April, reflecting growing economic uncertainties, according to e.surv, the UK’s largest chartered surveyor.
House purchase approvals hit 57,512 in April down 19.4% from 71,357 in March following the introduction of increases in stamp duty taxes. Compared with April last year, the number of mortgage approvals was down 14.9% - whereas they had grown annually between 14% and 20.2% in January, February and March.
The research follows a study by the Royal Institute of Chartered Surveyors published earlier this week which claimed interest in buying a house fell to its lowest level in eight years.
Richard Sexton, director of e.surv chartered surveyors, said: “The mortgage market is entering a more turbulent phase. As lenders steer for safety, three different forces are at work. First and foremost are the effects of the looming EU referendum on confidence and certainty for the UK. Whichever way the result, financial markets could see rapid shifts in the days and weeks beforehand – and especially immediately afterwards.
“Secondly, the lending market is in one sense beginning to return to its normal rhythm after suffering a hangover from the party of buy-to-let activity seen earlier this year. As this excitement begins to wear off, a more normalised lending climate is beginning to reassert itself. Home lending is solid beneath this predicted surface slowdown – but now the headache is by no means over as new economic risks cause understandable caution from lenders. The third major break on mortgage lending is a deeper foreboding about the solidity of the UK economy – quite subtle but potentially more major.
“It’s crucial for lenders to manage risks in the coming months. There now looks to be completely different interest rate speculation on the horizon and all eyes will be on the Bank of England to see the next steps taken. With some calls to cut interest rates rather than raise them, lenders will have to remain even more alert to economic conditions. And slowing growth is a further sign which is adding to doubts over economic security in general."