The number of mortgage authorizations for house purchases dropped to just 9,300 in May, 90% below February levels, according to the Bank of England’s currency and credit statistics.
Approvals for remortgage also declined 42% from February to 30,400.
Paul Stockwell, commercial director of Gatehouse Bank, said: “The number of mortgage approvals in May is about a third of what they were during the worst of the financial crisis, which puts the impact of the pandemic on the economy.
“Real estate portals have reported strong demand since the market reopened in mid-May. However, time will tell if the pent-up question will be successful.
“June will be the first full month of real estate transactions since the United Kingdom went into a freeze phase and it will be these figures that will be followed warmly as a measure of how determined the buyers and sellers who have returned to the market have been determined.”
Despite this negativity, mortgage lending started to recover in May. On a net basis, families borrowed an additional £ 1.3 billion against their homes, rising from nothing in April but above the £ 4.1 billion average over the six months to February 2020.
John Goodall, CEO of Landbay, said: “Mortgage lending increased in May and we can only hope to have turned the corner and we will see the demand increase month by month.
“However, for many people it will be more difficult to get mortgages, particularly if they have been laid off or have lost their jobs. This is reflected in the terrible situation where mortgage authorizations were only a tenth of what was in February.
“This means that demand for private rental property is likely to increase as the year progresses. Those who would have normally purchased a property may have a hard time doing so and we have already seen owners’ demand rise in the past month. “