The UK’s mortgage market showed signs of slowing towards the end of last year, with gross advances in the second half flat on the year before.
It’s thought that economic headwinds from the UK’s vote to quit the European Union in June last year are beginning to have an effect.
There were a raft of warnings ahead of the Brexit vote that have so far failed to materialise, though a spike in inflation to above the Bank of England’s two percent target means that household spending is expected to slow.
Mortgage lending in the first half of 2016 were £22bn higher than during the same period in 2015, according to research from GlobalData.
External forces will continue to mitigate against the market in 2017 and beyond, with political uncertainty and worsening macroeconomic conditions expected to bear down on consumer demand.
The mortgage market is expected to grow at a slower pace than in recent years, the research suggests, though lending will continue to increase, with gross advances forecast to reach £310.4bn by 2017.
Last month the Bank of England set out measures to rein in the riskiest mortgage lending, highlighted the risks associated with Brexit and said commercial property prices were “at the top end of sustainable valuations”.
Meanwhile, research earlier this year found that last year’s referendum result has contributed to a fall in the number of people moving home.
UK housing transactions in the second half of 2016 were nine percent down on the same period in 2015, according to figures from HM Revenue & Customs.
The listed estate agency group Countrywide says the vote “had an impact on confidence in the housing market”.
Some British banks are thriving however.
Daoud Fakhri, principal analyst for retail banking at GlobalData, said:
Tesco Bank enjoys a higher return on assets than any of its competitors. Its lack of a branch network and investment in modern IT systems has paid off, with the bank enjoying relatively low operating costs. In complete contrast, The Co-operative Bank continues to suffer the consequences of poor decisions made years earlier, principally its purchase of Britannia.