Mortgage approvals on house purchases decreased by 500 in August, to 64,700, bringing three consecutive months of growth to a stop.
The latest Money and Credit figures from the Bank of England show that approvals for remortgaging with a different lender also decreased by 900 in August, to 37,900.
Net mortgage borrowing decreased by £0.2 billion to £4.3 billion in August, following a £0.9 billion decrease to £4.5 billion in July.
The annual growth rate for net mortgage lending rose slightly, from 2.9% to 3.0% in August, although gross lending decreased to £22.7 billion, from £24.5 billion in July.
The average interest rate paid on newly drawn mortgages decreased for the sixth consecutive month, to 4.26% in August from 4.28% in July. However, the rate on the outstanding stock of mortgages increased slightly from 3.88% to 3.89%.
Stephanie Daley, director of partnerships at Alexander Hall, commented: “While mortgage approvals have dipped slightly on a monthly basis this is almost certainly down to summer seasonality and the broader picture remains one of resilience, with activity consistently holding above the 60,000 threshold for well over a year.
“This level of consistency highlights that underlying buyer demand is strong, and recent incentives, such as the decision to make the Mortgage Guarantee Scheme permanent and adjustments to loan-to-income caps, are helping to improve accessibility and affordability across the market.
“At the same time, major lenders have already started to respond with more flexible criteria, enabling more buyers to secure the finance they need. Looking ahead, the outlook for the remainder of the year remains positive, and we expect these supportive measures to underpin continued buyer activity.”
Jonathan Samuels, CEO of specialist lender Octane Capital, said: “A marginal month on month dip in approval numbers suggests that buyer appetites remain robust, however, the challenge facing the market at present isn’t a lack of intent on the side of homebuyers, but this intent translating into action.
“We’re simply not seeing buyers commit which has led to a surplus of stock and, as a result, sellers are finding transaction timelines increasingly lengthy and fraught with potential pitfalls.
“This has driven an increase in fall-throughs, with many buyers and sellers seeing chains collapse at the eleventh hour. In these circumstances, we’ve seen a growing number of residential sellers turn to the specialist finance sector to secure bridging loans, helping them to protect their onward purchase and keep transactions on track.
This highlights the critical role that specialist lending plays in today’s market, providing the flexibility and certainty required to overcome obstacles that the mainstream mortgage process often cannot resolve.”
Nathan Emerson, CEO of Propertymark, added: “Continued economic uncertainty and a traditionally quieter period during the summer holidays, alongside anxiety over the UK Government’s upcoming budget and decisions being made on interest rates, have perhaps contributed towards this decrease in mortgage approvals.
“However, the Bank of England’s freeze on interest rates last week will contribute to future confidence and stability in the mortgage market now that people on variable mortgages and those looking to finance their next home move have additional reassurance of static rates for now. We now look to November, which is when the next interest rate decision will be made.”