The Council of Mortgage Lenders reported mortgage lending rising by 14% year-on-year to May 2016 but said the prospects for the UK economy are now “very uncertain” after the Brexit vote.
Gross mortgage lending reached £18.2bn in May, an increase of 4% on April (£17.6bn) and 14% on May 2015 (£16bn).
But in its market commentary CML senior economist Mohammad Jamei said: “Prospects for the UK economy now look very uncertain, as businesses and households are likely to adopt a wait-and-see approach over the next few months.
“We expect this to affect sentiment and reduce activity below levels that would otherwise be expected in the near term, as both buyers and sellers adopt a wait-and-see attitude until the dust begins to settle.
“Market fundamentals underpinning house prices still look sound, and we do not expect significant house price falls, especially given the current supply demand imbalance.”
He added: “Given that the UK housing market continues to be somewhat distorted by the after effects of the stamp duty change on second properties and the build-up of uncertainty in relation to the EU referendum over the last few months, the downside to transactions may not be dramatic, but it may well be protracted.”
Adam Tyler, chief executive of the National Association of Commercial Finance Brokers, reckoned there is a lot of hysteria around the property market at the moment.
He said: “Our own view mirrors that of the Council of Mortgage Lenders in that market fundamentals still look sound and the sharp imbalance between supply and demand will prevent a material decline in prices.
“Sentiment may have shifted dramatically over the past few days but the structural imbalance between supply and demand is as strong as ever.
“Demand naturally tapered off in the buy-to-let sector following the stamp duty surcharge but it may experience a bounce after Friday’s referendum result.
“Current market and politico-economic volatility could benefit buy-to-let as investors once again look to bricks and mortar as a safe port in a storm, despite the new entry premium.
“The fact that bank rate is now more likely to go down than up in the near term will provide further support to the property market.
“Understandably, there’s a lot of hysteria surrounding the trajectory of the property market but our own view is that the reality will prove to be relatively benign.”