According to the Credit Conditions Survey for Q2, which reflects mortgage lenders’ experiences during this time, demand for secured lending on purchases went down by 80%. Remortgaging levels plunged by more than 50% during Q2, according to the lenders.

Meanwhile, reports from lenders suggested availability of mortgages to households in the three months to the end of May also suffered a fall. The survey suggested the availability of secured credit would decrease further over the next three months to the end of August.

However, lenders also expected demand to increase, however, in Q3.

Demand for secured lending for house purchases and remortgaging (source: Bank of England)

Jeremy Leaf, north London estate agent and a former RICS residential chairman, explained the survey provided a useful indicator of present trends and future direction of travel for the property market.

“This survey shows a relatively resilient housing sector in spite of significant disruption caused by the pandemic and looks forward quite optimistically to supply and demand in more balance as stamp duty changes and small increases in confidence play a more significant part,” he said.

Meanwhile, Mark Harris, chief executive of mortgage broker SPF Private Clients, said with the UK housing market in lockdown for a good part of the period covered by the survey, it was no surprise the demand for lending for new purchases and remortgaging decreased.

He added: “Like the Bank of England we would expect this to pick up in the next quarter. Overall spreads also widened and with lenders re-pricing upwards this past week while Swap rates continue to fall, this trend looks set to continue.”

He added: “The stamp duty holiday is a welcome boost to the market and should hopefully boost activity in the next few weeks and months.

“Transactions are far more important than house prices and if the volume of the former rise, it is good not just for the housing market but the whole economy.”

Andrew Montlake, managing director of mortgage broker, Coreco, was more cautious about the next quarter. He said: “With lenders expecting demand for mortgages to rise in the third quarter and supply to fall, the property market clearly has some significant challenges ahead.

“Job losses, as we saw on Thursday, are rising and so lenders are understandably nervous, especially at higher loan to values. These nerves are reflected in the widening of spreads.”