Net mortgage borrowing dropped £1.4bn in July, marking just the second fall in over a decade, in what could be a sign of things to come.

Following a record month of net borrowing in June which reached £17.9bn, July saw mortgage lending and approvals slow, according to the latest data from the Bank of England.

The number of mortgages approved for residential property purchases in July came to 75,200, down 6.4% on the 80,300 approved in June.

John Phillips, national operations director, Just Mortgages said: “After the rush to meet the stamp duty deadline, we were inevitably going to reach a period of calm, as the urgency to move has been removed somewhat.

“There is still plenty of desire to buy properties however, as although approvals for house purchases dipped in July, they were still above the pre-pandemic average.”

Alongside a sharp fall in mortgage borrowing and approvals, property sales fell 63% in July, with just 73,740 property transactions recorded, according to HM Revenue & Customs figures.

Andrew Montlake, managing director of independent mortgage broker, Coreco, commented: “The net repayment in July is partly a reflection of the end of phase one of the stamp duty holiday and partly a result of the stupendously low rates on offer, which are seeing people remortgage in droves.

“The crazily low rate environment has also enabled people to repay off more of their mortgage than they may otherwise have been able to.

“Mortgage approvals were always going to fall after the stamp duty holiday as people switched their focus to the holidays but demand is still very much there. What’s lacking is the supply to match it.”

Although Mortgage approvals fell 6.4% in July following the first stamp duty holiday reduction, Anthony Codling, chief executive of PropTech platform Twindig, points out that mortgage approvals last month remain 16% ahead of the 10-year average.

He commented “It seems there was no ‘cliff edge’ to the first stamp duty holiday reduction, and if mortgage approvals were to continue to drift slowly back to their pre-pandemic levels most would view that as a good result.

“The Stamp Duty holiday still has one month left to run, and will end during the important autumn selling season, but so far the giant cliff for the housing market looks like one small step for homebuyers.”