Net mortgage approvals for house purchases decreased by 500 month-on-month in August to 64,700, despite the base rate being cut to 4%, the Bank of England (BoE) has revealed.

The central bank’s latest money and credit data found that approvals for remortgaging also decreased by 900 in August to 37,900.

The annual growth rate for net mortgage lending increased slightly from 2.9% to 3% in this period, and gross mortgage lending fell from £24.5bn in July to £22.7bn.

Furthermore, the BoE revealed that net borrowing of mortgage debt by individuals dropped again by £200m to £4.3bn in August, after falling by £900m to £4.5bn in July, while net borrowing of consumer credit remained flat at £1.7bn.

The effective interest rate on newly drawn mortgages also decreased for the sixth consecutive month to 4.28%.

Personal finance analyst at Bestinvest, Alice Haine, said that the recent holiday period and speculative legislative changes may have dampened buyer activity in this period .

She added: "The drop in mortgage approvals suggests the housing market is beginning to stutter as it adjusts to the end of the stamp duty tax break and prepares for the Autumn Budget. Higher purchase costs have resulted in more muted property price growth in recent months as buyers negotiate harder to keep purchases affordable and sellers adjust their expectations and price homes more competitively to secure a sale.

"Add a looming Autumn Budget to the mix, along with rumours of property tax changes, and the market may be facing a fresh wave of uncertainty. Property tax reforms mooted so far include a new national sales levy to replace stamp duty, capital gains tax applied to the sale of high-value residences, council tax reform and National Insurance on rental income for landlords. The speculation has prompted some buyers to pause purchase plans as they wait to see what unfolds.

"On the plus side, slower house price growth, combined with more competitive mortgage rates than in recent years and easing lending criteria, has improved affordability for some."

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