Mortgage advisers have predicted up to 30 per cent of broker businesses may not survive the coronavirus crisis as the home purchase market looks set to grind to a halt.
Government-mandated social distancing and measures to self-isolate had already hampered home viewings and valuations. With the country now in lockdown a further steep drop-off in activity is expected.
This, alongside severe stock market falls eating into people's investments, means the housing market could suffer significantly.
Martin Stewart, director at the Money Group, said the purchase market would “disappear”, making it “inevitable” the mortgage broker market would see casualties if this was "not already happening”.
“The broker market is facing a 30-40 per cent retraction in business, possibly more depending on their model.”
Alan Lakey, director at Highclere Financial, said he would “not be surprised” if the coronavirus crisis resulted in a third of brokers dropping from the mortgage advice market.
He said: “There will be some unpleasant and unforeseen consequences of this. If you go back to 2008, when the financial crisis hurt mortgage lending, about a third of brokers left the market.
“I would not be surprised if that is mirrored during the coronavirus crisis. Many brokers do not get involved with stuff like protection, so there’s nothing to fall back on.”
Mr Lakey, who provides protection and general advice, said he expected his business to fall about 80 per cent over the next few months.
Daniel White, of Champion Hall & White, said the purchase market — home buying or moving rather than remortgaging or product transfers — would be a “disaster” for "goodness knows how long".
He said: “I can’t comprehend it. I was expecting a record year for business but now I’m just trying to keep the financials tight.
“The property market will stagnate, everyone will be on edge over whether they still have a job.”
According to Mr White, brokers who only work on purchases or those who had not looked after their client banks were the businesses most in trouble.
Yesterday (March 26) the government edged closer to suspending the housing market yesterday as it told those in the early stages of buying or selling to delay the process and that no visitors were allowed into properties for the time being.
Instead it suggested those looking to sell “use this time to start gathering together all the information you will need” while consumers who had already exchanged contracts were urged to delay the move date until after the stay-at-home measures had been lifted.
Funds from lenders have dried up over the past few weeks as banks and building societies pull back on new mortgages.
Major lender Barclays has limited the amount of mortgage applications it is accepting from brokers in a bid to restrict the flow of applications through its case booking process and has limited its high loan-to-value products.