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Lending to homebuyers slumped in July

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Written by: Christina Hoghton
15/09/2016
Remortgaging propped up mortgage lending as homebuyers steered clear in the weeks following the Brexit result.

Mortgage lending to home buyers fell significantly in the month following the EU referendum, as they borrowed 13% less in July, according to the Council of Mortgage Lenders.

House purchase borrowing totalled £10.6bn, down 13% month-on-month and 12% year-on-year.

This was made up of £4.4bn from first-time buyers (down 19% on June) and £6.2bn from home movers (down 9% on June).

Remortgage activity boosted the total lending figure, at £6bn, up 7% on June and 20% compared to a year ago.

Paul Smee, director general of the CML, said: “It is hard to determine whether these figures reflect a first uncertain reaction to the referendum vote, or are a sign of a market which was already cooling. It will be quite some time before a full assessment can be made.

“Remortgage lending has continued to grow, and reacted with a 7-year monthly high. Borrowers seem keen to take advantage of the wide range of competitive deals in the market and, following the base rate cut in August, this is likely to continue.”

Jody Baker, head of money at comparethemarket.com, added: “The dramatic drop in house purchase lending will undoubtedly raise questions over the impact of the Brexit vote on the market.

“While it certainly seems that economic uncertainty has had an impact, more data is needed before we can attribute the drop in lending to referendum jitters. The contrast of a 7% rise in remortgaging activity in July compared to June suggests that people are increasingly taking advantage of some great deals created by the low interest rate environment.”

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