The decision to leave the European Union will materially impact prospects for the UK housing market, the Council of Mortgage Lenders (CML) has warned.
The trade body for lenders and other professionals in the mortgage market issued a statement explaining that one of the first elements of the market likely to be affected is property transactions, as most transactions are discretionary.
The CML said this means some buyers and sellers will wait to get a clearer idea of where we might be headed. This would in turn dampen house price growth.
The trade body added: “The result of the EU referendum will weigh on housing market activity over the next few months, as some buyers and sellers will adopt a wait-and-see attitude for the foreseeable future.
“Lending over the next few months is likely to be driven by remortgage customers, as house purchase activity takes a back seat.
“Given the Bank of England governor’s statement following the referendum result, the UK is very unlikely to see a rate hike this year, and could possibly see a rate cut if the economy falters as a result of post-referendum uncertainty in the next few months.”
Hinting that a downside to new mortgage transactions will not be dramatic, but protracted. the CMLadded that “uncertainty will linger for some time.
Its statement said: “There will be particular uncertainty in the prime London market, where a higher proportion of buyers are foreigners, who may delay their purchase to assess the impact of the referendum result.
“Despite all of this, the characteristics of the UK housing market are unlikely to change dramatically in the near term, as there will continue to be a mismatch of supply and demand, stretched affordability and a relatively low number of home movers.”
Building Societies Association chairman Dick Jenkins said: “Today and for the foreseeable future nothing changes in the building society sector: Mortgages are available and retail savings are safe, exactly as they were before the referendum.
“The greatest concern for the UK economy and something that affects financial market sentiment and ultimately interest rates is uncertainty.
“The primary job for the government and politicians generally is to unite to ensure that they do everything possible to counter this and set the tone and framework for the UK economy to thrive.”