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Gross mortgage lending down over 3% year on year in August

Gross mortgage lending across the residential market in the UK reached £24 billion in August 2019, down by 3.2% compared to the same month in 2018, industry figures show.

There were 85,931 mortgages approved by the main High Street banks in August 2019, according to the data published by industry organisation UK Finance.

Mortgage approvals for home purchase were 3.2% higher, remortgage approvals were 0.1% higher and approvals for other secured borrowing were 0.4% lower than in the same month a year earlier.

Dilpreet Bhagrath, mortgage expert at Trussle, pointed out that this came after a set of high figures were recorded in July and the dip is likely to be due to Brexit uncertainty affecting buyers and sellers.

‘However, for first time buyers with a deposit already saved up there are a number of highly competitive mortgage deals across the market at the moment,’ Bhagrath added.

Buyer demand for mortgage products has been the one area of the market to remain buoyant in the face of political uncertainty, according to Marc von Grundherr, director of Benham and Reeves. ‘While it would seem that even this is starting to fall below expectation, we have seen them at least hover at consistent levels for a number of months now,’ he said.

‘While the chances are approval levels will no drop off steadily in the lead up to Christmas, we could see one last rally in October as aspirational buyers take advantage of current rates, in the event that a disorderly exit from the European Union results in lenders tightening the purse strings,’ he added.

According to Gareth Lewis, commercial director of property lender MT Finance, it is encouraging that High Street banks are doing more mortgage lending than in the same month last year.

‘But these are only marginal increases and if growth continues at this rate, it will take a long time for true stimulation of the market to happen. It is probably not enough to propel this market forward or stop property values from falling in some areas,’ he explained.

‘We need to see something more positive in terms of growth of money being lent because the property market is stagnant. But given that we have a month to go until we exit the European Union and no-one is any wiser as to what is going to happen, it seems unlikely that the market will get stimulus it needs anytime soon,’ he added.

Mike Scott, chief property analyst at full service estate agent Yopa, warned that a new slowdown may soon begin as the October Brexit deadline draws closer and the political uncertainty seems no closer to a resolution. ‘But it is likely that the market will again recover quickly once the short term outlook is clearer,’ he said.