Figures from e.surv showed house purchase approvals dropped by 2.4% in March, when 60,280 loans were approved by UK mortgage lenders.

The firm said this was down to market uncertainty ahead of May’s general election.

First-time buyers bore the brunt of the market slump as loans to new buyers dropped 10.5%. In total 9,343 of these loans were approved in March.

Richard Sexton, director of e.surv chartered surveyors, said supply of mortgages remained strong but demand had waned.

“The supply of accessible mortgages remains strong, but demand has wavered in the face of an uncertain general election,” he said.

“This is an unwelcome though not unexpected setback. You can lead a horse to water, but you can’t make it drink.”

The number of borrowers with deposits of 15% of less decreased during March following fourth months of growth.

Northern Ireland was hit the hardest with the proportion of higher loan-to-value loans in falling from 27% to 22% of all house purchase loans. There was a similar story in the North West of England where these loans dropped from 24% to 21% of the market.

Yorkshire was the top location for borrowers with small deposits. In March 25% of all borrowers were on high loan-to-value deals.

Sexton added: “Smaller deposit borrowers, typically first-time buyers, are among the most cautious borrowers. Picture yourself buying a home for the first time – investing a carefully husbanded nest-egg into a property you want to enjoy and likely resell at some point in the future.

“It’s understandable that they might want to wait for the dust to settle after the election before they make the leap.

“Higher LTV loans are still available to borrowers who want them. The Help to Buy scheme expanded in March to include a new ISA available exclusively to first-time buyers, helping them to build that all-important deposit. With the price war between banks producing attractive fixed rate deals, it’s an excellent time to be a first-time buyer.