The research, carried out by e.surv, points to economic uncertainty and the new tax regime for buy-to-let purchases, as the driving forces behind the slowdown.
Richard Sexton (pictured), director of e.surv chartered surveyors, said the mortgage market was entering a more turbulent phase.
The volume of loans granted for house purchases dropped by 15% year-on-year in April from 67,594 to 57,522.
Prior to this year-on-year fall, annual rises of 20%, 18% and 15% had been since for the first three months of the year as Stamp Duty changes caused an uplift in overall lending levels.
“First and foremost are the effects of the looming EU referendum on confidence and certainty for the UK,” said Sexton. “Whichever way the result, financial markets could see rapid shifts in the days and weeks beforehand – and especially immediately afterwards.”
Sexton said the lending market was beginning to return to its normal rhythm after suffering a hangover from the party of buy-to-let activity seen earlier this year.
He added: “As this excitement begins to wear off, a more normalised lending climate is beginning to reassert itself. Home lending is solid beneath this predicted surface slowdown – but now the headache is by no means over as new economic risks cause understandable caution from lenders.”
A third major factor which could depress mortgage lending was a deeper foreboding about the solidity of the UK economy.
Lenders are being urged to manage the risks over the coming months as they head into speculative interest rate environment.
With some calls to cut interest rates rather than raise them, lenders will have to remain even more alert to economic conditions. Slowing growth is a further sign which is adding to doubts over economic security in general.
In a press conference held by the Bank of England after the release of yesterday’s inflation report, Mark Carney said a vote to leave the EU could have “material economic effects” on the exchange rate and supply and demand within the UK economy, both factors that could affect how monetary policy is set.
“The combination of these influences on demand, supply and the exchange rate could lead to a materially lower path for growth and a notably higher path for inflation than in the central projections set out in the May Inflation Report,” he said.
