The number of loan approvals for house purchase fell from a two-year high of 58,728 in January to 46,499 in February, a 21% decline.
On an annual basis, the number of loans rose 1.6% year-on-year in February, down from a year-on-year rise of 29.6% seen in January.
E.surv says the January figure was inflated by a glut of first-time buyers looking to beat the Stamp Duty exemption, which ends on March 24, but as the deadline draws closer this is now dropping out of the equation.
Loan approvals for purchases under £250,000, the threshold for the Stamp Duty exemption, fell by 22% from 43,459 in January to 33,944 in February.
Furthermore, the number of loans to those with deposits of less than 15% declined from 7,870 in January to 5,533 in February, the lowest level since July 2011.
Richard Sexton, director of e.surv, says the Stamp Duty rush distorted January’s figures, so while February’s drop in approvals looks alarming, it actually represents a return to normality.
He says: “Harder times for the market lurk in wait. Borrowers may find lenders notifying them of higher rates to cover their increased funding costs, as we have already seen with Halifax’s SVR increase.”
He adds: “The first-time buyer market looks set to enter a trough as it rebalances itself in the aftermath of the swollen activity of the last few months. Lending conditions aren’t any easier for new buyers, and they still have to cross a high threshold to secure a mortgage at an affordable rate.”