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Mortgage approvals fell in August latest Bank of England data shows

The number of mortgage approvals for house purchase fell to 65,500 in August, down from the 18 month high of 67,000 in July, the latest Bank of England money and credit figures show.

But they remained within the narrow range seen in recent years. However, net mortgage borrowing by households weakened to £3.9 billion in August following a strong net flow of £4.5 billion in July.

As such, the outturn was in line with the average seen since 2016. The annual growth rate was unchanged at 3.2%, in line with growth rates of the past three years.

It means there are still challenges in the home lending sector, according to Kate Davies, executive director of the Intermediary Mortgage Lenders Association (IMLA).

‘Mortgage lending remains consistent and stable in the face of ongoing uncertainty in Westminster. Borrowers are still keen to press ahead with their plans to step onto or up the housing ladder and our research shows that advisers remain confident about the future of the mortgage market,’ she said.

Looking ahead, she pointed out that as priority the Help to Buy scheme, which has supported over 220,000 housing transactions since 2013, needs to be replaced. ‘The market is already responding by providing more options for first time buyers, such as higher loan to value mortgages, but it can still be hard for younger buyers to meet the stringent requirements of the current affordability rules,’ she explained.

‘We need more dialogue between lenders, builders, regulators and the Government to forge a coherent policy which supports responsible lending on good quality properties designed for younger buyers and those on lower incomes,’ she added.

According to Kevin Roberts, director of the Legal & General Mortgage Club, wider political uncertainty is undoubtedly on the minds of consumers, but the mortgage market remains strong.

‘Housing schemes like Help to Buy and innovation from lenders, such as family support mortgages are giving younger borrowers in particular more options to join the property ladder. Competition in the sector is rife and there are also some great deals available for those looking to buy or remortgage, especially if they speak to an adviser,’ he said.

‘These experts can give borrowers access to thousands more mortgages than if they went direct to a lender and 95% of consumers who used an adviser would likely recommend their family or friends do the same,’ he added.