UK mortgage approvals fall to 18-month low in July, signals a cooling property market

Mortgage approvals in the United Kingdom fell to an 18-month low in July, signaling a cool down in the country’s real estate market in the immediate aftermath of the UK's decision to leave the European Union.

The number of new home loans approved by banks in July fell to 60,912, the Bank of England said Tuesday. That's fewer approvals than the 64,152 in June and the fewest since January 2015, data released by the Bank of England showed Tuesday.

Lending to consumers, net of repayments, fell to 3.8 billion pounds (USD5 billion) from GBP5.1 billion a month earlier. The decline was driven by falls both in mortgage lending and unsecured borrowing. Business lending rose. Non-financial firms borrowed GBP2.2 billion from banks in July, up from GBP1.1 billion in June.

Howard Archer, chief UK and European economist at IHS Global Insight, said the slowdown in mortgage approvals was further proof that house prices could ease back by around 3 percent over the latter months of 2016 and there could well be a further 5 percent drop in 2017.

Meanwhile, the BoE added that net consumer credit rose by GBP1.2 billion (USD1.6 billion, EUR1.4 billion) last month, significantly below the GBP1.7 billion increase analysts had expected and the smallest increase since August last year.