A bus passes the Bank of England in London, Britain August 4, 2016. REUTERS/Neil Hall/File Photo
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Mortgage lending in the UK has fallen to its lowest level in 18 months and consumer borrowing has slowed down, suggesting consumers are turning away from large purchases after the Brexit vote.

The comprehensive official figures from the Bank of England for July were worse than economists expected and also showed that non-financial companies borrowed less in July than the average of the previous six months.

The figures will intensify arguments over the short-term economic effects of the vote for Brexit.

The BoE data showed 60,912 mortgages approved for people buying homes, a 3,000 decrease on the figures for June and well below the 68,775 average of the previous six months. The figures represented the lowest mortgage approvals since January 2015, but stronger than the average from 2009 to 2013.

Economists had expected a higher level of mortgage approvals. Scott Bowman of Capital Economics said: “With Brexit uncertainty having driven new buyer inquiries lower in recent months, we suspect that mortgage approvals have further to fall over the rest of the year.”

Further evidence that consumers have thought twice about large purchases came in the consumer credit element of the BoE figures, a large part of which relate to car finance. The increase in this lending was £1.2bn in July, well down on the £1.6bn average of the first six months of 2016. The data tallied with figures from the Society of Motor Manufacturers and Traders for July, showing a 6.1 per cent annual fall in private vehicle registrations.

Martin Beck of the EY Item Club said the figures showed “a broad-based weakening” in lending to households in July. He added: “August may see some recovery, in line with other economic indicators and aided by further declines in borrowing costs . . . but longer term, a less benign environment for consumers, reflecting a rise in unemployment and the squeeze on incomes from higher inflation, suggests that households’ appetite to borrow will stay relatively subdued”.

60,912

mortgages approved for people buying homes in July, a 3,000 decrease on the figures for June

Companies’ net finance raised from all sources including equity, bonds and commercial paper rose only £300m in July, far below the £3.4bn monthly rise over 2016 so far.

Samuel Tombs of Pantheon Macroeconomics said the BoE’s rate cut and other easing measures have made it cheaper and easier for companies to borrow, but he judged that “with huge uncertainty regarding the trade and regulatory environment for businesses post-Brexit unlikely to disappear soon, slightly cheaper borrowing costs will do little to prop up business investment over the coming quarters”.

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