Despite the slowdown, purchase approvals kept pace with the previous six-month average, according to the Bank of England’s Money and Credit report.
Meanwhile gross mortgage lending was at its highest level since May after a two per cent rise from £21.5bn to £22bn.
Experts said the purchase market held up well in August when homebuyers typically take a break from shopping for their next home in favour of a holiday.
Andrew Montlake, managing director of Coreco, said: “Three years of delay and indecision have created a phenomenal amount of pent-up demand and that saw house purchase mortgage approvals in August stay at the six month average.
“Despite a backdrop of political, economic and now constitutional chaos, the property and mortgage markets are ticking along quite well. There may be gridlock in Westminster but most Brits are now getting on with their lives.”
End of year rally
Overall, the number of approvals increased month-on-month from 128,596 to 128,694 boosted by the remortgage sector.
At 48,515, remortgage approvals were two per cent up on the previous month, when 47,620 applications for refinance were given the green light. Month-on-month, the value of remortgage approvals rose from £8.4bn to £8.5bn, in line with the previous six months’ average.
Montlake said he expected mortgage approvals for home purchases to rally in September and remain robust throughout the autumn and winter months.
However Intermediary Mortgage Lenders Association (IMLA) executive director Kate Davies said despite borrowers’ determination to press ahead with their plans to move home while the country is mired in Brexit uncertainty, there are still challenges in the sector which must be addressed.
“As a priority, we need to replace the Help to Buy scheme, which has supported over 220,000 housing transactions since 2013,” said Davies.
“The market is already responding by providing more options for first-time buyers, such as higher loan-to-value mortgages, but it can still be hard for younger buyers to meet the stringent requirements of the current affordability rules.
“We need more dialogue between lenders, builders, regulators and the government to forge a coherent policy which supports responsible lending on good quality properties designed for younger buyers and those on lower incomes.”