Mortgage approvals for house purchases plummeted by 90 per cent from February to a record low in May, the latest figures from the Bank of England show.

There were 9,300 purchase approvals worth a total of £1.9bn in May, compared to 15,900 worth £3.2bn in April and 73,700 worth £15bn in February before lockdown began.

The May number is, adds the BoE, a third of the trough seen during the financial crisis of 2008.

Approvals for remortgages also fell, from 34,100 and £6bn in value in April to 30,400 and £5.3bn in May. In February, this metric read 52,000 at a value of £9.2bn.

Meanwhile, net lending edged up from the zero reading released by the BoE last month to £1.2bn. This compared to a previous six-month average of £4.1bn.

This growth, the bank says, reflects more new borrowing by households “rather than lower repayments.”

Phoebus Software sales and marketing director Richard Pike comments: “When you consider the fact that there were already mortgages in the pipeline before the lockdown in March, you can see that many of the approvals in May were due to lenders flicking the switch and starting the approval process again.

“However, when we look forward the figures in the coming months will not only reflect the market shutdown, but also an element of caution as people consider their long-term finances. Unemployment figures are already on the rise and recession is on the horizon, so confidence is going to be hit.

“As things get back to some sort of normality there will undoubtedly be calls for a stamp duty cut to give the market the boost it needs.  However, with the Treasury’s coffers severely depleted that is highly unlikely.”

SPF Private Clients chief executive Mark Harris, adds: “Covid-19 has had a devastating impact on the mortgage and property markets, so it is no surprise that lending was weak in May, with approvals for house purchase falling.

“With lockdown meaning that lenders were unable to send valuers out to physically view properties, the number of mortgages approved fell considerably.

“However, lenders remain keen to lend and are awash with cash to do so. With the backlog of valuations clearing now that surveyors can once again carry out valuations, we expect mortgage approvals to pick up. Mortgage rates remain extremely competitive and lenders are slowly returning to higher LTVs, which is good news for first-time buyers in particular.’