LONDON (Reuters) - British banks approved the fewest mortgages for house purchase since March last month and demand to refinance home loans also fell following the Bank of England's interest rate rise in August, industry data showed on Wednesday.
The number of mortgages approved for house purchase dropped to a six-month low of 38,505 in September from 39,241 in August, down 6.7 percent on a year earlier, the seasonally adjusted figures from UK Finance showed.
Britain's housing market has slowed since the Brexit vote in June 2016. Most of the weakness has been in London and neighbouring areas, which have also been hit by a rise in purchase taxes for property worth over 1 million pounds.
Net mortgage lending dropped to 1.550 billion pounds last month from 1.617 billion pounds, the weakest since January.
"The mortgage market softened slightly in September, following strong remortgaging activity in the months preceding the recent base rate rise," UK Finance's managing director of personal finance, Eric Leenders, said.
Unsecured consumer lending was more stable, growing by an annual 4.0 percent in September, but lending to non-financial companies was down by 2 percent on the year, extending a run of falls seen since April.
"Economic uncertainty continues to impact on businesses' appetite for finance as overall lending remains slightly below the same period last year," said Stephen Pegge, UK Finance's managing director for commercial finance.
The Confederation of British Industry said on Tuesday that factories were scaling back investment as uncertainty about Britain's relationship with the European Union remained unclear, little more than five months before Brexit.
(Reporting by David Milliken; Editing by William Schomberg)