"The March data is showing the early effects of the outbreak on mortgage markets that had just a month earlier been at their most active in five years."
The Bank says "evidence of a decline in housing market activity started to become apparent" as mortgage approvals fell by just over 20% during the month.
Approvals for remortgage fell 20% to 42,600, the fewest since August 2016.
Simon Gammon, managing partner of Knight Frank Finance, commented: “The March data is showing the early effects of the outbreak on mortgage markets that had just a month earlier been at their most active in five years.
“Unless the housing market recovers quickly with the necessary government support, we believe as many as 350,000 mortgages for house purchase, including 150,000 for first-time-buyers might no longer take place this year.
“The scope of potential losses in tax revenue for everything from stamp duty to VAT raised from home renovations underlines how important the housing market is to the wider economy.
“The good news is mortgage lenders that had been in retreat a few weeks ago are starting to look beyond the lockdown. Banks are trying to re-establish their pipeline of new business by raising the loan-to-value ratios they will lend at, increasing the maximum loan sizes for which they will accept remote valuations and re-introducing products they had previously withdrawn.”
Richard Pike, sales and marketing director at Phoebus Software, added: “After the start we had to 2020 the whole market was buoyant and looking forward to the potential of a return to pre-financial crisis activity. No-one could have predicted what came next and, as we can see from the March figures, the effect of the coronavirus outbreak started to be felt almost as soon as the lockdown was implemented.
“Despite the fact that many of the housing transactions, being reported in these figures, were in the pipeline up to three months earlier, it is evident that the lockdown caused some to be stalled. The hope is that the transactions that are waiting in the wings will be completed once the crisis is over, but we have to be prepared for some to fall by the wayside. We are likely to see an element of caution creep back into the market and fears over affordability, with many people seeing a real knock to their finances, cannot be ignored.
“Nonetheless, we are hearing more positive comments from the government that it is planning an easing of the current measures. Whilst, in our own market, we are already hearing brokers reporting an increase in new-build enquiries. So, perhaps, this heralds the return of at least a little confidence.”
