The housing market has become the latest casualty of the coronavirus epidemic as the Government lockdown snuffs out the nascent recovery which followed the Conservative election victory in December.

Estate agents and surveyors had seen a sharp rebound in the number of house transactions across the UK following the election result, after years of economic and political uncertainty. House prices had also staged a sharp recovery post the election.

However, late last week the Government said that in an effort to slow the spread of the coronavirus, it would discourage buyers from going ahead with house sales and purchases unless they have already exchanged contracts, saying no-one should move unless absolutely necessary.

As a result, estate agents have shut up shop, banks are withdrawing many of their mortgage offers, and house prices look set to fall again.

The Government move, which has effectively suspended the country’s property market, was actually prompted by calls from the high street banks which were concerned about the impact of the pandemic on valuations and about lending money with the economy in lockdown.

With agents and valuers no longer able to visit properties and submit surveys, banks’ credit teams have little idea of valuations so many are not just reducing the number of loans they approve but are also cutting the amount they are prepared to lend.

It should be noted that mortgage providers will give customers who have already exchanged contracts the option to extend their mortgage offer for up to three months to enable them to move at a later date.

Although most banks have committed to passing on the 0.65% cut in Bank of England base rates, according to consumer magazine Which? the industry withdrew over 900 mortgage products
last week.

Since the last cut in bank base rates, the number of available mortgage deals has fallen from 5,697 to 4,761, a drop of 16%, with tracker mortgages the biggest casualty by far, down 47% from 306
to just 163.

Britain’s biggest mortgage lender Halifax, owned by Lloyds (LLOY), has pulled most of the mortgages it sells through brokers, including all first-time buyer deals, and is no longer offering mortgages with a loan-to-value of more than 60%.

Cutting the number of deals on offer also helps the banks to manage the pressure on their call centres, which are understaffed and have been inundated with enquiries.

Customers are not just calling about new mortgages: many homeowners are looking to remortgage at lower rates thanks to the record low level of base rates, while many others are requesting mortgage ‘holidays’.

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