The latest Credit Conditions Survey from the Bank of England shows demand for mortgages has slowed ‘significantly’ in the first quarter of this year.

According to lenders, demand for secured lending for house purchase has fallen significantly in Q1, for the third successive quarter, but is expected to increase in Q2.

The fall in demand was most notable in prime lending, where the net percentage balance was the lowest since the third quarter of 2008.

Some lenders have attributed the reduction in secured lending demand over recent quarters to a combination of changes in regulatory policy; concerns about housing affordability; and uncertainty about the outlook for the housing market.

However demand for secured lending for house purchase, and particularly prime lending, is expected to increase in Q2.

Similarly, demand for secured lending for remortgaging also fell significantly in Q1 but is expected to increase slightly in Q2.

Commenting, Jonathan Samuels, chief executive of Dragonfly Property Finance, said: “For demand to have fallen particularly sharply at the upper end of the market underlines the sensitivity of this demographic to political uncertainty.

“Many prime and super-prime buyers are sitting on their hands and want to see what the next Government looks like before they commit to a purchase. This is especially the case in the Capital.

“That this is the most uncertain election in decades has certainly triggered more caution at this level of the market than normal. What the next Government will look like is anyone’s guess.

“Overall, we expect demand to pick up during the summer months. With mortgage rates still very low and people feeling better off due to zero inflation, confidence is improving.

“We would also expect to see more money enter the property market as a result of changes in the pension rules.

“The fall in demand for home loans in the first three months of the year is consistent with the ongoing slowdown in activity levels.

“Over the past six to nine months, the property market has without doubt paused for breath.”